Manufacturing slows in China

China's manufacturing expanded last month at the slowest pace in almost three years, according to a survey of purchasing managers.

The Purchasing Managers' Index fell to 52 from 53.3 in May, the China Federation of Logistics and Purchasing told Tootoo.com through an e-mailed statement. That's the lowest since August 2005.

The index of new export orders declined for the third straight month, signaling that weaker global demand may further cool the world's fastest-growing major economy. China's growth will drop below 10 percent this year for the first time since 2002, the World Bank forecasts.

"Manufacturing growth will continue to weaken, in line with the economy as a whole,"said Sun Mingchun, an economist with Lehman Brothers Holdings Inc. in Hong Kong.

Indexes for new orders and output declined.

The input-price index climbed to a record 75.7 from 73.9, underscoring the risk that rising raw-material costs will drive up consumer-price inflation.

"There's no reason for optimism about export growth in the second half,"said Li Ruoyu, an analyst with the State Information Center, a government research institute, citing the export-order index.

Overseas shipments climbed 22.9 percent in the first five months of this year, less than the 25.7 percent gain for all of 2007, on weaker U.S. demand.