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Official China June PMI falls to 54.5
Last Updated(Beijing Time):2007-07-02 11:23

China's official purchasing managers' index fell to 54.5 in June from 55.7 in May, the China Federation of Logistics and Purchasing said on Monday.

The association compiles the index on behalf of the National Bureau of Statistics.

A reading over 50 indicates an expansion of activity while one below 50 suggests contraction.

Zhang Liqun, an economist with the Development Research Centre, a think-tank under the State Council, China's cabinet, said the drop in the index pointed to a flattening of growth.

The economy expanded 11.1 percent in the first quarter from a year earlier.

The dip in the PMI reflected the introduction of more restrictive policies in recent months, Zhang said.

These included steps to brake investment and deter exports of energy-intensive goods as well as a tighter monetary policy, he said in a commentary for the logistics and purchasing group.

The association said that, although demand for manufactured goods remained strong, the growth rate was easing. As a result, companies were expanding less rapidly.

A growing number of companies -- 19.4 percent of respondents in June's survey -- is reporting cash-flow strains, the association said.

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