BEIJING--China's economy sputtered on in August with factory output slowing, according to two measures, as the effect of stimulus measures earlier this year fades.

The official Purchasing Managers Index fell to 51.1 in August from 51.7 in July, which was a 27-month high on recovering exports, the China Federation of Logistics and Purchasing said in a statement Monday.

Meanwhile, HSBC Holdings PLC reported that its China manufacturing PMI for August fell to 50.2 from 51.7 in July. Both output and new orders at smaller firms recorded weaker expansions in August, HSBC said, while job shedding intensified.

A reading above 50 indicates an expansion from the previous month while a figure below 50 points to a contraction. The official PMI was roughly in line with a median 51.0 forecast of 10 economists polled earlier by The Wall Street Journal.

Analysts said Monday's data suggest that China's economy is experiencing a second slowdown this year after peaking in July, dragged down by China's real estate slump and credit concerns. Some said the flagging activity shows that the government will need to resort to more stimulus measures, which accelerated infrastructure spending and loosened lending to rural areas and some sectors, to hit its growth target.

"I don't think they can deliver their 7.5% annual target without a lot more stimulus," said Macquarie Group economist Larry Hu.

The two PMIs tend to capture different activity, with the official measure favoring large state-owned companies while HSBC's tracks more small and medium-size companies. So the downward trend in both measures suggests a broader slowdown.

New orders and new export orders also declined, according to the official gauge, indicating that China's industrial sector is facing growing challenges in its investment and operating environment, analysts said.

"This shows that the pressure on Chinese growth has spread from real estate to manufacturing," said Crédit Agricole CIB economist Dariusz Kowalczyk. "The whole second half will see downward pressure on manufacturing and the whole Chinese economy."

HSBC chief economist Qu Hongbin said external demand improved last month but domestic demand appeared subdued. "We think the economy still faces considerable downside risks to growth in the second half of the year, which warrant further policy easing to ensure a steady growth recovery," Mr. Qu said in a statement.

Economic growth in China recovered in the second quarter to 7.5% year on year after hitting 7.4% in the first quarter, the slowest pace in 18 months. But since then, growth in several real estate, retail and investment indicators has decelerated or reversed, underscoring the challenges ahead for Chinese policy makers. Credit was also squeezed in July after strong expansion in June, which some analysts attributed to banks' desire to meet bookkeeping requirements at the end of the second quarter.

Average new home prices fell in China in August for the fourth straight month, albeit at a slower pace, declining 0.6% compared with July's 0.8% decline, data provider China Real Estate Index System reported late Sunday, as property developers continue to battle excess supply.

Liyan Qi and Mark Magnier and Esther Fung