HSBC China flash PMI climbed to a five-month high of 49.7 in May. This beat expectations for a rise to 48.3.
This is up from 48.1 in April. A reading below 50 indicates contraction.
Domestic demand in China has been sluggish, and the last report showed that the manufacturing sector and the economy were losing momentum.
Beijing announced a mini-stimulus to help stabilise growth and this is expected to have improved business sentiment.
Beside the worrying decrease in the employment sub index it was a much stronger report than expected and Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said,
The improvement was broad-based with both new orders and new export orders back in expansionary territory. Disinflationary pressures also eased over the month and output prices increased for the first time since November 2013.
All around it is a positive number and Shanghai stocks have surged out of the gates up 0.3% so far while on Forex markets Aussie dollar traders like it taking the AUDUSD rate up 30 points to 0.9253 since the release.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.