China's economy under pressure, growth slows

China's businesses and the broader economy came under increasing pressure in August.

Factory activity expanded at a slower pace.

While the services sector slumped into contraction.

The data raises the likelihood of more near-term policy support to boost growth.

The world's second-biggest economy staged an impressive recovery from the global health crisis.

But momentum has weakened recently due to fresh outbreaks and high raw material prices.

Slowing exports and tighter measures to tame hot property prices and a campaign to reduce carbon emissions have also weighed.

The official manufacturing Purchasing Manager's Index fell to 50.1 in August, from 50.4 in July.

It held just above the 50-point mark that separates growth from contraction.

The manufacturing PMI showed demand slipped sharply, with new orders contracting.

Some analysts expect most of the weakness to reverse with relaxing of restrictions.

But warn that tight credit conditions and weakening foreign demand will continue to weigh on China's economy.

Higher raw material prices, especially of metals and semiconductors, have also pressured profits.

Earnings at China's industrial firms in July slowed for the fifth straight month.

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