(Yicai) July 31 -- China's manufacturing and services purchasing managers' indexes both fell back into contraction territory in July as high temperatures, heavy rainfall and typhoons disrupted production and business activity.

The manufacturing PMI fell to 49.2 in July from 50.3 in June, dropping below the 50-point threshold for the first time since March as some manufacturers entered the traditional seasonal production slowdown, according to data the National Bureau of Statistics released today.

The decline in the factory gauge reflects mounting downward pressure on the economy, with demand weakening noticeably, particularly domestic demand. Order-related indexes all declined and remained below the 50-point threshold, limiting the release of production capacity, said Zhang Liqun, an analyst at the China Federation of Logistics & Purchasing.

The manufacturing new orders index dropped 2.7 points from June to 48.5. High temperatures, typhoons and flooding disrupted procurement and inventory-building activities in some regions, while manufacturers' ability to secure new orders was also affected, said Wen Tao, an expert at the China Logistics Information Center.

Seasonal factors also affected port logistics, causing fluctuations in exports. The new export orders index edged down 0.5 point from June to 49.6, Wen added.

China's manufacturing sector has a solid foundation for recovery in August, Wen said. As the impact of extreme weather fades, production capacity and supply chains in affected regions are expected to normalize, allowing market demand to recover steadily. At the same time, the continued implementation of macroeconomic policies should boost effective investment and support the transformation and upgrading of the manufacturing sector.

Non-Manufacturing Activity Also Contracts

The NBS data also showed that China's non-manufacturing business activity index fell to 49 in July from 50.2 in June, returning to contraction territory for the first time in three months. More specifically, the construction PMI declined 2 points to 47, while the services PMI slipped 1.1 points to 49.3.

The NBS said increased leisure, entertainment and travel during the summer vacation helped improve activity in cultural and tourism-related industries. However, sharp declines in wholesale trade and financial services were the main factors dragging the services PMI lower this month.

As weather conditions improve and summer consumption continues to recover, business activity in the construction sector is expected to rebound, while consumer-related service industries should continue expanding, supporting an overall recovery in the non-manufacturing sector, said Wu Wei, an expert at the CLIC.

China's composite PMI output index, which combines the manufacturing production index and the non-manufacturing business activity index, fell 1.3 points from June to 49.3 in July, according to the NBS.

Editors: Dou Shicong, Emmi Laine