China's manufacturing sector grew at its slowest pace in seven months in June, with the purchasing managers index (PMI) for the sector easing further to 50.2 percent, according to official survey results published on Sunday.

The manufacturing sector's PMI reading, which measures the country's manufacturing activity, retreated 0.2 percentage points from May and marked the slowest pace of growth in seven months.

Official PMI data released by the China Federation of Logistics and Purchasing (CFLP) and the National Bureau of Statistics suggested the manufacturing sector is still expanding, albeit at a slower pace.

A reading of 50 percent demarcates expansion from contraction.

For the second quarter, the manufacturing PMI was 51.3 percent, according to official data.

"The PMI's moderation in June was driven partly by seasonal factors," said Cai Jin, president of the CFLP, adding that similar slowdowns have occurred in June in previous years.

"Compared with past years, the extent of the slowdown in June this year was minimal, which suggests that the economy is building up a foundation for stabilized growth," Cai said, warning "downward pressure still exists."

"The PMI is still above 50 percent, which is not bad," said Zhao Qingming, a senior researcher with China Construction Bank, the country's second-biggest lender by market value. "I think the economy is bottoming out and we will likely see growth accelerate in August."

Gloomy Signs

A more detailed study of the official PMI report, however, painted a bleak picture for the world's second-largest economy.

The output sub-index for June stood at 52 percent, down 0.9 percentage points from May, indicating that the production growth of manufacturing enterprises is still slowing.

The sub-index for new orders continued to trend below the boom-or-bust line for two consecutive months by dipping 0.6 percentage points from May to 49.2 percent, signifying that demand in the manufacturing sector is declining, according to the PMI report.

The PMI data showed that the employment sub-index fell 0.8 percentage points from May to 49.7 percent in June, meaning that the current economic slowdown has affected the job market, as manufacturers have reduced hiring in the wake of slipping demand.

The input price sub-index dropped sharply to 41.2 percent, down 3.6 percentage points from May, which some analysts said will help bring down inflation and give more room for policymakers to loosen tightening measures.

The sub-index for stocks of finished goods hit a seven-month high of 52.3 percent in June, creating pressure for manufacturers to reduce their inventories.

As suggested by the data, the size of an enterprise matters when economic slowdown occurs. The PMI for large enterprises was 50.6 percent in June, while the PMI for medium- and small-sized companies hit 50 and 47.2 percent, respectively.

The official PMI readings were in line with a preliminary report released by HSBC last month that showed China's manufacturing activity in June had slowed to its lowest level in seven months.

The HSBC flash China manufacturing PMI stood at 48.1 in June, compared with 48.4 in May, according to the HSBC report.

The calculation of the official PMI data covers 820 enterprises, including state-owned and large enterprises, while HSBC's poll includes around 400 small- and medium-sized companies.

Zhang Liqun, a researcher with the Development Research Center of the State Council, or China's cabinet, said the economy may be stabilizing, as the PMI has softened within narrower ranges.

Compared with the 2.9-percentage-point month-on-month decline in May, the manufacturing PMI saw only a 0.2-percentage-point drop in June.

As the government adopts more measures to maintain growth, investment growth is stabilizing in China, while consumption is expanding and exports are rebounding at a faster pace, Zhang said.

"All of these support my expectation for trending economic stability after the slowdown," Zhang said, "but a recovery in the production of manufacturing enterprises will take some time."

The central government pledged last month that it will prioritize stabilizing economic growth, warning that the economy faces "increasing downward pressure."

In the latest moves to spur investment and growth, the central bank cut the benchmark interest rate by 25 basis points last month following a reduction of 0.5 percentage points for the reserve requirement ratio for banks in May.