As China's manufacturing data hit an eight-month low in July due to worsening external demand, more aggressive easing policies should be rolled out to strengthen investment, analysts say.

Data released by the China Federation of Logistics and Purchasing and the National Bureau of Statistics on Wednesday showed that the purchasing managers index (PMI) fell to 50.1 percent in July, down 0.1 percentage points from the previous month.

The manufacturing PMI index continues to remain above contraction level, since the reading is above 50.

But the PMI in July was the lowest reading since November, reflecting that the world's second largest economy is suffering a slowdown from weakening exports, which calls for more measures to buoy the economy.

A separate PMI reading, by HSBC, which mainly focuses on small- and medium-sized businesses, indicated a slowing deterioration with a reading of 49.3 in July, up from 48.2 in June, the largest month-on-month increase in 21 months.

Barclays said in a research note that China's official PMI of July marked the bottom for the economy, and that continued deterioration in external demand is becoming an increasing drag on the overall economy.

John Ross, visiting professor of economics and management at Shanghai Jiao Tong University, said the softening July PMI indicated that "strong downward pressure on China" still exists, as "the US economy is slowing, Europe is in recession and most recent Asian economic news is bad".

"The general trend in the world economy is that economic slowdown is continuing or deepening due to low levels of investment," he said. "Since May, China's government has taken measures to begin to counter negative pressures by increasing investment in China's economy, but it is too early for this to have a big effect yet."

Oliver Barron, head of NSBO China, a Chinese government policy investment research house, expected an improvement in economic data late in the third quarter or in the fourth, "as the pro-growth policies take time to feed through to the economy".

"Further policies similar to those already implemented, such as tax cuts and monetary policy loosening, should be announced on a piecemeal basis if PMI remains low and other economic data point to a further slowdown," he said.

The index came out after a meeting of the Political Bureau of the Central Committee of the Communist Party of China on Tuesday that reaffirmed maintaining stable economic growth as the top priority for the country. But analysts said a large-scale stimulus plan like that of 2008 is not on the table, as the meeting indicated that economic growth is still within the target range, and a hard-landing is unlikely.

"China does not need a stimulus program on the scale of 2008," Ross said. "The world economy at present is stagnating rather than sharply contracting as at that time. But China does need medium-scale but clear stimulus policies by the state to restart investment."

He said whether economic growth will speed up in the second half of the year depends on the government firmly continuing and deepening the measures.

Last month, the People's Bank of China cut interest rates for a second time this year. The one-year benchmark lending rate was reduced by 31 basis points, taking it to 6 percent.

lvchang@chinadaily.com.cn