BEIJING - China's manufacturing sector softened slightly in July due to seasonal factors, but underlying growth momentum remained resilient, with emerging industries gaining traction and business confidence continuing to improve.

The purchasing managers' index (PMI) for manufacturers stood at 49.3 in July, down from 49.7 the previous month, according to data released Thursday by the National Bureau of Statistics (NBS).

The manufacturing industry entered its traditional low season, compounded by high temperatures and extreme weather events, including heavy rain and flooding in some regions, said Zhao Qinghe, a senior NBS statistician.

Despite the overall decline, Zhao stressed that several sub-indexes pointed to a positive trajectory. The PMI for high-tech manufacturing was 50.6, with that of equipment manufacturing at 50.3, both remaining above the threshold that separates expansion from contraction.

Industrial sentiment also showed notable improvement as the business expectation index climbed to 52.6 - up from 52 in June. Sectors such as automobiles, railway and electrical equipment reported particularly strong optimism - with their expectation indexes all exceeding 55.

Other bright spots revealed by data included a sustained expansion in the production index, a continued price recovery and steady growth among large enterprises.

Analysts noted that the manufacturing sector has seen strengthening momentum amid an upward economic trend. Data released on Sunday revealed that manufacturing profits in June had grown by 1.4 percent year-on-year, a sharp reversal from the 4.1-percent decline recorded in May.

While external pressures remain, recent indicators point to steady economic recovery. In the first half of 2025, China's gross domestic product expanded by 5.3 percent from a year earlier - underscoring robust momentum in key areas, ranging from consumption to industrial output.

The economy is underpinned by a stable foundation, multiple advantages, strong resilience and great potential, while the supporting conditions and fundamental trends for long-term sound economic development have not changed, a meeting of the Political Bureau of the Communist Party of China Central Committee stated on Wednesday.

The meeting also recognized risks and challenges facing the economy and mapped out a series of measures for the second half of 2025 - including accelerating the issuance and utilization of government bonds, unleashing potential in domestic demand, stimulating the vitality of private investment, and cultivating emerging pillar industries with global competitiveness.

China has ample policy space and a well-equipped macroeconomic toolbox at its disposal, said Yang Zhiyong, head of the Chinese Academy of Fiscal Sciences

Non-manufacturing sectors

For China's non-manufacturing, the PMI came in at 50.1 in July, down from 50.5 the previous month, according to the official data.

The sub-index for the construction sector came in at 50.6 in July, down from the 52.8 registered a month earlier, said the NBS.

The sub-index for the service sector stood at 50 in July, the data revealed.

READ MORE: Policy steps driving growth in service sector

Business activity indices in sectors related to railway transportation, air transportation, postal services, culture, sports and entertainment were all above 60 - indicating a high level of prosperity.

In contrast, business activity indices for industries including real estate and residential services were below the boom-bust line.