Mumbai, Aug. 1 -- China's manufacturing sector saw a deterioration in operating conditions in July, according to latest PMI data. A softening of new business growth led manufacturers to scale back production for the second time in three months. The slowdown in sales coincided with a steeper contraction in new export orders.

Lower production led companies to trim their headcounts again in July. That said, purchasing activity rose slightly as optimism about output in the year ahead improved.

Average input prices meanwhile increased for the first time in five months. Firms nevertheless lowered their selling prices again as competition for new business intensified.

The headline seasonally adjusted Purchasing Managers' Index (PMI) posted 49.5...