China’s manufacturing sector contracted in July for the first time in five months, signaling a potential slowdown in the broader economic recovery. The official manufacturing purchasing managers index (PMI) dropped to 49.2 from 50.3 in June, according to data released Friday by China’s National Bureau of Statistics. This result fell short of market expectations and indicated a decline in factory activity, as values below 50 point to contraction.

The slowdown in factory output was attributed to weaker domestic demand for goods. Additionally, several typhoons that struck parts of China during July likely disrupted production and supply chains, contributing to the decline. Analysts have been closely monitoring the manufacturing sector as an important gauge of the health of the world’s second-largest economy.

China’s economic growth had already decelerated in the second quarter, expanding at an annual rate of 4.3%, the slowest pace since early 2020. The contraction in July’s factory activity adds to concerns about the sustainability of the recent rebound, which had been supported by consumer spending and government stimulus measures.

The data underscores the challenges facing China as it attempts to navigate ongoing global uncertainties and domestic pressures. Policymakers may need to consider further interventions to bolster demand and stabilize manufacturing output in the coming months.