Operating conditions across China's manufacturing sector improved at the slowest pace for eight months in July, with output and new business both expanding at softer rates. Notably, new export orders fell at the steepest pace for 25 months. A further reduction in staffing levels meanwhile contributed to a sustained increase in backlogs of work. On the price front, the rate of input cost inflation weakened since June, but remained elevated, while output charges rose only modestly. Optimism towards the year ahead remained relatively subdued amid concerns surrounding tough market conditions, strict environmental policies and the potential impact of the US-China trade war.

The headline seasonally adjusted Purchasing Managers' Index fell from 51.0 in June to 50.8 in July. Although still above the neutral 50.0 mark, the latest figure highlighted the slowest improvement in the health of the sector since November 2017.