Chinese factory activity fell to its weakest level in five months in June, a private survey released on Monday showed, pointing to continued downward pressure on the economy due to the trade war with the United States. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI), a gauge of sentiment among the country’s factory operators which tends to include more small, private sector firms, fell to 49.4, down from 50.2 in May and below economists expectations of a smaller drop to 50.1 in a Bloomberg survey. The June reading was the lowest since January, with a number below 50 meaning the manufacturing sector contracted after having expanded in the three previous months. The weaker-than-expected PMI private survey data followed Sunday’s official manufacturing PMI, which covers more larger and state-owned firms, and it also indicated a contraction in the sector after remaining unchanged at 49.4 in June, also below economists’ forecast, according to the National Bureau of Statistics. The official non-manufacturing PMI edged down to a six-month low of 54.2 driven by a decline in the services component. The decline in the new orders component of both the private and official indices points toward cooling demand in China, analysts said. A renewed decline in export orders reflected the challenging external environment, analysts added. While the trade truce agreed by Chinese president Xi Jinping and his US counterpart Donald Trump on Saturday at the G20 summit in Osaka would freeze new US tariffs on Chinese imports, the existing 25 per cent tariffs on US$250 billion of Chinese goods will remain in place. The increase in the tariff rate on US$200 billion of those goods in early May is only just starting to be felt in the Chinese economy, with the remaining US$50 billion having already been covered by 25 per cent tariffs since June 2018. Robin Xing, chief China economist at Morgan Stanley, said the official June PMI showed lingering tariff uncertainty in the wake of the G20 meeting would likely continue to dent corporate confidence and exert continued downward pressure on growth and the job market. Xing predicted that Chinese gross domestic product growth would moderate to 6.2 per cent in the second half of the year because any policy response by Beijing to enact new stimulus would be reactive in nature and so involve some delay. “As developments at the G20 meeting have not removed the uncertainty created by trade tensions, we expect continued growth moderation in the second half despite more policy easing,” Xing said. Julian Evans-Pritchard, senior China economist at Capital Economics, said that the renewed decline in the Caixin PMI proved that stabilisation of economic growth at the end of the first quarter and start of the second quarter was short-lived. Headwinds from US tariffs and cooling global growth mean a renewed slowdown is on the horizon, Evans-Pritchard added.