The PMI is an important measuring criteria for manufacturing activities. Indicating the fall in demand is the falling sub-index of new orders. China's economic growth depended largely on the manufacturing and the export sector. But a lesser demand in both the sectors, in addition to its own economic growth, has led to a slump in the market.
"The June PMI fall, across the board on major sub-indexes, indicates downward pressure in the economy," said Zhang Liqun, an economic expert with the Development Research Centre, which is a top government think tank.
The economic expansion of China's economy was at an annual rate of 7.7%, a drop from 7.9% of the previous quarter. A slowdown in the niche markets in the US and the Eurozone have badly impacted the economy here.
As a result, the country is thinking of alternatives to re-balance the economy by depending less on exports and developing means to engage the domestic sources. But that too, comes with a possibility of slow growth rate in the near future.
Adding to the woes of the China economy, Zhiwei Zhang of Nomura said, "there is a 30% chance" that China's growth rate may drop below the 7% mark in the third or fourth quarter".
In fact, the World Bank cut down its growth forecast for China, holding the re-balancing efforts responsible. China is now expected to grow 7.7% in 2013, a slip from its earlier projection of 8.4%.