A contraction in manufacturing activities has slowed the growth in profits at China's industrial companies in the first seven months of the year, the National Bureau of Statistics said during the weekend.

Net earnings among industrial companies rose 28.3 percent from a year earlier to 2.8 trillion yuan (US$434 billion) from January to July, a moderation from the 28.7 percent pace in the first half of the year.

"It is expected that industrial profit will ease with the rapid rise in production costs and on sluggish overseas demand," said Li Maoyu, an analyst at Changjiang Securities Co.

Li predicted the slight rebound in industrial profit in June would be short-lived because of various negative factors in the domestic and external markets.

The profit gain from January to July was attributed to private businesses, whose profit surged 46.6 percent from a year earlier to 760.8 billion yuan. Earnings of foreign-invested firms and those from Hong Kong, Macau and Taiwan added 14.4 percent to 729.4 billion yuan.

The official Purchasing Managers' Index, a gauge of manufacturing activities nationwide, fell to 50.7 percent in July. The HSBC PMI, which focuses on privately-owned firms and exporters, settled at 49.3 last month. A reading below 50 means a decline in both surveys.