The purchasing managers' index (PMI) for China's manufacturing sector came in at 49 in July, down from 50.2 in June, data from the National Bureau of Statistics (NBS) showed on July 31.

A reading above 50 indicates expansion, while a reading below reflects contraction.

Negative impacts including the traditional production off-peak period, insufficient market demand, and the weakened performances of energy-intensive industries have weighed on the industry, according to NBS senior statistician Zhao Qinghe.

Despite the overall trend, the PMI for agricultural and sideline food processing, and automobile and railway sectors remained in expansion territory, indicating that the output and demand of these sectors are recovering.

The sub-index measuring purchase prices of major raw materials retreated 11.6 percentage points from last month to 40.4. The sub-index for prices at the factory gate was 40.1, down 6.2 percentage points from June.

The sharp price fluctuation of the bulk commodities in the international market has dragged down the enterprises' purchase demands, Zhao noted.

Pressured by the complex internal and external environment, the sub-index for production and operation activity expectation went down 3.2 percentage points from last month to 52, but has remained in the expansion area.

In July, the sub-index for production stood at 49.8, down 3 percentage points from the previous month, data showed.

The new order sub-index decreased 1.9 percentage points to 48.5, indicating shrinking demand in the manufacturing market.

"Insufficient market demand is the major obstacle that the manufacturing firms are facing, and the recovery foundation of the industry still needs to be consolidated," Zhao said.

However, Sunday's data showed that China's non-manufacturing activities continued to recover, with the PMI for the non-manufacturing sector at 53.8 in July, staying in the expansion territory for the second month in a row.

Boosted by the pro-growth policies, the service sector continued to recover in July as the sub-index for business activities in the sector stood at 52.8, staying in the expansion range.

A meeting of the Political Bureau of the Communist Party of China Central Committee held on Thursday urged efforts to consolidate the upward trend of economic recovery, maintain stability in employment and prices, keep the economy running within an appropriate range, and strive for the best possible outcome.

It, particularly, emphasized that macro policies should play an active role in expanding demand, and fiscal and monetary policies should effectively make up for the lack of social demand