GROWTH in China’s manufacturing sector likely steadied in July but remained at a subdued pace, a Reuters poll showed, fuelling hopes that a slowdown in the world’s second-largest economy may be gradually bottoming out.

    The official manufacturing Purchasing Managers’ Index (PMI) likely stood at 50.2 in July, on par with the previous month’s reading, according to the median forecast of 20 economists in the poll.

    But growth was tepid, with the reading just above the 50 point mark that separates contraction from expansion on a monthly basis.

    “Momentum remains soft as real activities saw little improvement in June,” ANZ economists said in a note, adding that the indicator could edge down to 50.1 in July.

    The flash Caixin/Markit PMI released last week showed China’s factory activity contracted by the most in 15 months in July, reinforcing views that the struggling Chinese economy needs more stimulus.

    The official survey looks more at larger, State-owned firms, while the Caixin/Markit survey focuses on smaller firms.

    Weighed down by a cooling property market, factory overcapacity and sluggish domestic demand, China’s economy grew 7 percent in the first six months of the year, which is in line with the government’s full-year target.

    But the equity market panic since mid-June has fuelled concerns about the health of the economy and risks to the financial system.

    China’s stocks suffered their biggest one-day fall since 2007 Monday and gyrated wildly again Tuesday. However, they bounced back more than 3 percent yesterday, as the government’s latest efforts to prop up values restored a measure of stability to the stock market.

    China’s top economic planner said Tuesday that it was optimistic on the outlook for the economy in the second half of 2015, but was paying close attention to volatility in stock markets.(SD-Agencies)