China's manufacturing activities grew at their slowest pace in seven months in June but the results were better than many observers had feared.

The official Purchasing Managers' Index, a comprehensive gauge of operational conditions in manufacturing, fell to 50.2 last month from May's 50.4 and April's 53.3, the China Federation of Logistics and Purchasing said yesterday.

A reading above 50 indicates expansion. There had been concern that the gauge would drop below 50 into contraction.

Zhang Liqun, a federation economist, said China's economy was still slowing but ''there are signs of a moderating slowdown, which indicates the economy is stabilizing.''

Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd, said it was fortunate China's manufacturing sector was still expanding.

''Although the data fell to a seven-month low, they are better than market expectations and help bolster people's confidence when the government has strengthened efforts to spur growth,'' Zhou said.

Component indices showed that new export orders fell 2.9 points from a month earlier to 47.5 in June, dragging new orders down to 49.2.

Continued growth

Production lost 0.9 points to 52, staying above the expansion threshold thanks to the textile, furniture, transport equipment and food sectors, which continued to grow.

China's economy rose 8.1 percent annually in the first quarter, the slowest in nearly three years. Some economists estimated growth may fall below 7.5 percent in the second quarter.

To stimulate growth, China has unveiled measures, including cuts in interest rates and the reserve requirement ratio, subsidies for energy-efficient consumption, faster approval for new investment projects and wider access for private capital into previously state-dominated fields.

But China is moving cautiously with the measures, mindful of the painful hangover of inflation and debt from its 4 trillion yuan stimulus to cushion the impact of the 2008 global crisis.

Zhou predicted a relatively strong rebound in China's economy soon amid the enhanced measures, including one more reserve ratio cut that would pump more liquidity in the banking system.