(Yicai) July 31 -- Activity in China’s manufacturing sector contracted for the third consecutive month in July amid seasonality, weak demand, and extreme weather.

The manufacturing purchasing managers’ index came in at 49.4 this month, compared with 49.5 percent in both June and May, the National Bureau of Statistics announced today. A reading below 50 indicates contraction.

New orders inched down to 49.3 from 49.5, indicating shrinking demand, while production slowed to 50.1 from 50.6, showing a continued expansion in output.

The manufacturing PMI mainly declined because of the production off-season, insufficient market demand, and extreme weather conditions, such as high temperatures and floods, said Zhao Qinghe, a senior statistician at the NBS.

Expectations for production and operations plunged to 53.1 from 54.4 in June, indicating that most manufacturers remain optimistic about the market developments.

Services PMI

The non-manufacturing PMI dipped to 50.2 in July from 50.5 the month before, the NBS data also showed. Though activity in the service sector expansion slowed further, it remained in expansion territory for the 19th month in a row.

Confidence slipped, with the business activity gauge falling to 50 from 50.2. The business activity indexes for the retail, capital market services, real estate, and other industries were lower than 47 this month, showing weakness, Zhao noted.

Construction activity plunged to 51.2 percent from 53.3, mainly due to unfavorable factors such as high temperatures, heavy rains, and flooding, according to Zhao.

Business activity expectations sank to 56.6 from 57.6, indicating that service providers stayed relatively optimistic about market developments.

The composite PMI output index, which is the weighted sum of the manufacturing production sub-index and the non-manufacturing PMI, fell to 50.2 from 50.5. This shows that the expansion in production and operations at Chinese enterprises has slowed.

Editor: Futura Costaglione