A key index for business confidence in China's manufacturing sector has worsened for the first time in two months, signaling that the country's economy is again slowing.

The National Bureau of Statistics on Sunday said the sector's purchasing managers' index, or PMI, fell to 49.0 in July from 50.2 in the previous month. The bureau surveyed 3,200 businesses.

A reading above 50 indicates improvement, while a figure below points to deterioration.

Factory activity remained sluggish as domestic demand did not recover enough due partly to the resurgence in coronavirus infections in some cities.

Business confidence among manufacturers had shown signs of picking up following a slowdown caused by anti-virus curbs such as lockdowns in Shanghai earlier this year.

The PMI for non-manufacturers, including hotels and restaurants, was 53.8 in July. That translates to a fall of 0.9 points from June. But the figure stayed above 50 for the second consecutive month.

China's Communist Party leadership met in late July and discussed economic policies for the rest of 2022. But the leaders made no mention of the government's initial economic growth target for the whole year of around 5.5 percent.

Analysts say the leaders effectively shifted their stance to not aggressively pursuing the goal. The question now is how Beijing will seek to spur the economy.