GROWTH in China’s manufacturing sector slowed more than expected in July, as the worsening trade dispute with Washington and bad weather weighed on factory activity.

The official Purchasing Managers’ Index (PMI) released yesterday fell to 51.2 in July, from 51.5 in June and below the 51.3 estimate in a recent poll of economists. It was also the lowest index reading since February but remained above the 50-point mark that separates growth from contraction for a 24th straight month.

Firms were hurt by trade frictions, rain and high temperatures in July, which is also a cyclically slow season for some sectors, said national statistics bureau official Zhao Qinghe in a statement released with the data.

The gauge of factory activity is the first major reading of the world’s second-largest economy since the second quarter of this year, when China logged a modest slowdown in growth, weighed by government efforts to tackle debt risks and escalating U.S. trade tensions.

The PMI’s July new export orders index remained in contraction in July, but did not change from the previous month’s reading of 49.8, a sign trade conditions have not worsened significantly.

Capital Economics senior China economist Julian Evans-Pritchard said a weaker yuan was likely helping exporters cope with the hit to activity from new tariffs, although a weak reading on imports indicated softening domestic demand.

“Today’s data are consistent with our view that China’s economy is on track to slow further this quarter and next, triggering additional policy easing,” Evans-Pritchard wrote in a note.

The sub-index on imports dipped into contraction in July and was the lowest since February.

China’s June exports growth cooled slightly from the previous month but remained solid, as exporters rushed to move shipments before tariffs went into effect July 6.

A production sub-index fell to 53.0 in July from 53.6 in June, while a new orders sub-index declined to 52.3 from 53.2.

Another survey released by the statistics bureau yesterday showed growth in China’s service sector moderating in July, with the official non-manufacturing Purchasing Managers’ Index dipping to 54.0 from 55.0 the previous month.

A reading on the construction industry fell 1.2 points to 59.5 in July.(SD-Agencies)