(Yicai Global) July 31 -- China's manufacturing purchasing managers' index rose by 0.3 percentage points on the month to 49.7 in July, climbing for the first time since April this year but still below the 50 point threshold that represents expansion.

The new order index was up 0.2 point at 49.8, ending a three-month slide and the new export order index jumped 0.6 point to 46.9, the National Bureau of Statistics said today, but noting that market demand was still far below this time last year, when the new order index was at 52.3.

The slightly higher demand in July led to increased manufacturing, with the production index up 0.8 point at 52.1, the NBS added, also the first rise in four months. Tax cuts and monetary easing also boosted corporate confidence, with the production and operations expectation index up 0.2 point at 53.6.

This is a sign of a slowing in the economic downturn, said Zhang Liqun, an analyst at the China Federation of Logistics and Purchasing. But the index is still below 50 so the decline in the economy cannot be underestimated, he added, saying there needs to be a consolidated effort to build the foundations for economic recovery.

The PMI at larger manufacturers was up 0.8 point at 50.7, but for mid-sized and small-sized firms it fell 0.4 point and 0.1 point to 48.7 and 48.2, according to the NBS data.

This suggests a need for increased support for SMEs, said Wen Hao, an analyst at the China Logistics Information Center, adding that the price of raw materials increased in several industries this month -- particularly agriculture and food processing -- which hampered companies across these sectors.

Editors: James Boynton, Dou Shicong