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.

Commenting on the data, NBS senior statistician Zhao Qinghe said business activities saw a slowdown in expansion.

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, he said, adding that high temperatures and floods also dampened the construction sector.

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, the pharmaceuticals, the railway, ship and aerospace equipment, and the electrical machinery saw their expectation indexes at 57 or above, indicating strong optimism.