China factory activity healthiest in five months, HSBC flash PMI shows
HSBC flash PMI of 49.7 is best reading in five months, but still shows slight contraction
China's factory sector turned in its best performance in five months this month, a preliminary HSBC survey showed yesterday, though overall manufacturing growth still contracted slightly, suggesting the outlook remains murky.
The HSBC flash China manufacturing purchasing managers index (PMI) recovered to 49.7 from April's final reading of 48.1, beating a Reuters' poll forecast of 48.1.
But the data is a touch below the 50-point level that separates a monthly growth in activity from a contraction, indicating that manufacturers actually experienced a slight drop in business.
We think more policy easing is needed to put a floor under growth
Still, those hoping for any sign of stabilisation in China's wobbly economy may find some welcome relief in the report.
A breakdown of the survey results showed the handful of closely followed indices that measure output, domestic and foreign demand all improved substantially to rise above the 50-point mark, from sub-50 levels in April.
New export orders, a proxy for foreign demand, showed the biggest turnaround. The index climbed a hefty 3.4 points to 52.7, a level not seen in nearly three-and-a-half years.
"The improvement was broad-based, with both new orders and new export orders back in expansionary territory," said Qu Hongbin, chief economist for China at HSBC.