The China Federation of Logistics and Purchasing said its monthly purchasing managers index fell to 50.9 in June from 52 in May, 52.9 in April and 53.4 in March. The index has remained above 50, the benchmark for expansion, for 26 straight months.
The report said the trend likely augurs a further slowdown in growth brought on by inflation-fighting curbs on credit.
Declines were greatest in the production, new orders, purchasing volume and prices for raw materials indices, it said. The survey also showed a contraction in production of chemicals, textiles, and transportation equipment. Imports and new export orders also slowed.
The survey "indicates that future economic growth may continue to decrease," federation analyst Zhang Liqun said. But he said the results of the survey did not suggest China would face a "deeper correction."
After months of forecasting that inflation would moderate by midyear, China is expected to announce inflation in June surged above 6 percent, partly due to rising food costs due to drought and floods that have damaged crops across much of the central part of the country.
Many inside China expect authorities to raise key interest rates sometime soon, in a fifth hike since October, to counter surging costs. Beijing has repeatedly ordered state-owned banks to boost their reserves, aiming to curb excess credit.
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