HSBC China Flash PMI surged to 50.8 in June, from a reading of 49.4 the previous month.
This beat expectations for a more modest rise to 49.7.
This puts Chinese manufacturing in expansionary territory.
“This month’s improvement is consistent with data suggesting that the authorities’ mini-stimulus are filtering through to the real economy,” HSBC chief economist Hongbin Qu said in a press release.
“Over the next few months, infrastructure investments and related sectors will continue to support the recovery. We expect policy makers to continue their current path of accommodative policy stance until the recovery is sustained.”
Beijing announced a mini-stimulus following weak economic data at the start of the year and the People’s Bank of China announced targeted reserve requirement ratio (RRR) cuts. This is expected to have improved business sentiment.
A breakdown of the sub-indices shows improvement in internal and external demand, though new export orders increased at a slower rate.
This chart shows the rebound in PMI: