Xinhua quoted the China Federation of Logistics and Purchasing said the Purchasing Managers' Index for China manufacturing sector stood at 52.1% in June down by 1.8 percentage points from last month.

The PMI includes a package of indices to measure manufacturing sector performance. A reading above 50% indicates economic expansion while that below 50% indicates contraction. It was the 16th straight month that the index was above 50%.

The index hit a record low of 38.8% in November 2008 when the global financial crisis started to weigh on China economy. The last time the index fell below 50 was February last year.

The National Bureau of Statistics said in a statement the PMI index slowed for the second consecutive month, indicating a moderation in the pace of China's manufacturing expansion because of the country's macro regulation policies and slowdown in global economic recovery.

Mr Lu Ting China economist of the Bank of America-Merrill Lynch said "Since the PMI is based on firm-level surveys, the draconian property tightening measures in China and the European debt crisis could weigh on manager sentiment, which might in turn impact the survey results."

Mr Zhang Liqun a researcher with the State Council's Development Research Center said "The reading of the June index indicates China economic growth is at a key stage turning to stabilization. The foundation for a new round of sustainable growth is forming, which needs to be consolidated."

China gross domestic product surged 11.9%YoY in the first quarter, accelerating from 10.7% in the last quarter of 2009.

(Sourced from Xinhua)