Data Show New Strains in Chinese Economy

BEIJING—China's manufacturing activity last month grew at its slowest pace since November, a signal that the world's second-largest economy hasn't bottomed out.

The official manufacturing Purchasing Managers' Index fell to 50.2 in June from 50.4 in May, the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics, said Sunday. A PMI reading above 50 indicates an expansion in manufacturing activity, while a reading below 50 indicates contraction.

The June figure exceeded market expectations—the median forecast of 11 economists polled by Dow Jones Newswires was 49.8—but economists said the reading wasn't promising, as subindexes for new orders, exports and imports all painted gloomy pictures.

The new-orders subindex fell to 49.2 last month from 49.8 in May, while new export orders dropped to 47.5 from 50.4. The imports subindex was at 46.5 in June, down 1.6 points.

"I am pessimistic about the exports situation in the second half-year, as the euro zone will step into recession," Citi economist Ding Shuang said, adding that he expects both exports and imports to creep up by single digits monthly for the rest of this year and 2012 as a whole. "It is impossible for exports and imports to grow by over 10% separately this year." The Ministry of Commerce said late last month that China this year can achieve the goal of around 10% growth in total trade, exports and imports.

Exports in May were up 15.3% from a year earlier, accelerating sharply from April's 4.9% pace and easily beating the 6.9% growth that economists had expected. But economists warned against reading too much into the surprisingly strong figures.

Mr. Ding said Beijing will likely seek to boost the economy by cutting benchmark interest rates twice in the third quarter, with the first cut possibly in July. He expects the economy, helped by those measures, to rebound in the second half of the year.

The China Federation of Logistics and Purchasing said the PMI usually falls in June and this year's decline is the lowest ever. Federation analyst Zhang Liqun said in the statement the June PMI "signals that decline in the economic growth in the future is likely to stabilize," though he warned that "it will still take some time for manufacturers to resume production."

—Liu Li

A version of this article appeared July 2, 2012, on page A12 in the U.S. edition of The Wall Street Journal, with the headline: Data Show New Strains In Chinese Economy.