China's economic output continued to grow in July as the business outlook remained optimistic, but seasonal factors including heat waves and floods somewhat dragged down the expansion.

According to the Purchasing Managers' Index (PMI) released Wednesday by the National Bureau of Statistics (NBS), the composite PMI output index stood at 50.2 this month, mildly down from 50.5 in June. The manufacturing PMI inched down to 49.4, and the PMI for the service and construction sectors combined retreated to 50.2.

A PMI reading above 50 indicates expansion, while a reading below 50 reflects contraction.

The manufacturing sector registered a slightly lower business climate due to unfavorable factors including the traditional slack season, insufficient market demand, and extreme weather conditions, commented NBS senior statistician Zhao Qinghe, adding that high temperatures and floods also dampened the construction sector.

Services related to railway transport, air transport, postal services, culture, sports and entertainment sectors saw rapid growth in July, while those related to retail, capital market services and property sectors logged contraction.

The sub-index for the construction sector was 51.2 in July, down from 52.3 in June. Zhao attributed the moderation to adverse factors including heat waves, rainstorms and floods around the country, which disrupted the progress of construction projects.

Despite the headwinds, most enterprises still held a positive outlook on the market trend, the data showed.

The sub-index on business expectations came in at 53.1, 56.6 and 52.9 for manufacturers, service providers and construction companies, respectively. In particular, pharmaceuticals, railway, ship and aerospace equipment, and electrical machinery manufacturers saw their expectation indexes at 57 or above, indicating strong optimism.

(Xinhua with edits)