Here's why China factory activity shrinks for fourth straight month

As China continues to struggle to improve its post-Covid recovery, country's factory activity contracted for the fourth straight month in July.

According to the National Bureau of Statistics (NBS), the official manufacturing purchasing managers' index (PMI) -- a key measure of factory output -- came in at 49.3, below the 50-point mark that separates expansion and contraction.

July's reading was slightly higher than June's 49.0 figure and was better than forecasts in a Bloomberg survey.

"The overall level of manufacturing prosperity continued to improve," NBS statistician Zhao Qinghe said in a statement.

China is struggling to improve growth as its post-Covid recovery runs out of steam, due in large part to sluggish consumer spending.

The non-manufacturing PMI, which measures business sentiment in the services and construction sectors, fell to 51.5 in July from 53.2 in June, as activity in capital market services and real estate shrank.

A run of dismal economic data over recent months has ramped up calls for officials to unveil support measures.

On Monday the government released a 20-point plan to increase consumption, including more support for housing demand, the culture and tourism sector, and green consumption such as electric vehicles.

China this month said its economy grew 6.3 percent in the second quarter, much weaker than the 7.1 percent predicted in an AFP survey of analysts.

The country's top leaders have warned that the economy faces "new difficulties and challenges" as well as "hidden dangers in key areas".

Zhao on Monday also pointed to a low volume of overseas orders, describing a "complicated and severe external environment" and lacklustre demand as major challenges for Chinese manufacturers.