Guangzhou, Guangdong -- (SBWIRE) -- 07/11/2011 -- Chinese manufacturing activity has fallen to its lowest level in more than two years, fuelling concerns that the world’s second-largest economy is slowing down because of aggressive action by the government to tame inflation.

China’s official purchasing managers’ index – a key measure of the manufacturing sector – dropped to 50.9 in June, down from 52 a month earlier. The figure was below market forecasts and perilously close to dipping below the 50 line that would signal a contraction in industrial activity. The index recorded its lowest level since posting 49 in February 2009 during the global financial crisis.

Output and new orders in the official manufacturing survey all slowed sharply, but so did input prices, indicating that inflationary pressure from global commodity costs was clearly on the wane. A lessening of inflation would help pave the way for a relaxation of China’s policy stance.

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