BEIJING (MNI) - The growth in China's manufacturing sector fell for a third straight month in July on softening production activity, according to the data released by the China Federation of Logistics and Purchasing (CFLP) on Sunday.

China's semi-official purchasing managers index fell back to 51.2 in July from 52.1 in June and 53.9 in May. The July reading was the lowest since February 2009 (49.0).

PMI readings above 50.0 signal expansion in manufacturing sector activity, while readings below 50.0 signal contraction. The further the index above or below 50, the faster the expansion or contraction in the sector.

The CFLP index has stayed above the 50 break-even mark for 17 straight months.

The CFLP said 13 out of the 20 industries it surveyed recorded PMI readings above 50 in July, compared with 14 in June. Chemical fibers, smelting of ferrous and non-ferrous metal and four other industries saw contraction in July.

The production index saw the biggest decline among all sub-indices. falling sharply to 52.7 in July from 55.8 in June. Some 12 out of the 20 industries surveyed reported a reading of over 50, compared with 15 in June. Garment and metal products still registered readings of above 60.

The new order index eased to 50.9 in July from 52.1 in June and while new export order index also edged down to 51.2 in July from 51.7 in June.

The CFLP said the July data showed the slowdown continued but the pace of decline has slowed.

"The domestic and overseas market environment has improved markedly compared with the same period of last year. The government has considerable room to adjust economic policies. The economic growth rate is expected to stabilize in the future and full year economic growth rate is seen around 9.5%," said Zhang Liqun, a government economist who advises the CFLP survey, in an accompanying statement.

Despite moderation in both orders and production, the index measuring employment rose strongly to 52.2 in July from 50.6 in June with 17 out of 20 industries booking hiring increases last month.

And cost pressures continued to moderate, with the input price index dropping to 50.4 in July from 51.3 in June.

The PMI is jointly produced by the CFLP and the National Bureau of Statistics.

The results compare with those of the MNI China Business Sentiment survey, released last Friday, which showed overall conditions for Chinese companies stabilized after a sharp decline in June. The current conditions index inched up to 64.94 from June's 63.51 after falling sharply from 78.46 in May.

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