The Chinese manufacturing purchasing managers' index, or PMI, rose to a six-month high in June after a weak start to the year, the results of a survey by the China Federation Of Logistics And Purchasing and the National Bureau of Statistics showed Tuesday.
The manufacturing PMI rose to 51 in June, in-line with economists' expectations, from 50.8 in May.
Julian Evans-Pritchard, Chief Economists at Capital Economics, commented that the PMI data signals that the broader economic conditions are stable for now, helped by the government's targeted support measures along with healthy external demand.
The results of the survey showed that the manufacturing sector showed broad-based improvement, with nine out of twelve sub-indices showing increases.
The new orders index rose 0.5 percentage points to 52.8 in June and the output index increased 0.2 percentage points over the month to 53 in June.
However,the employee index remained below the no-change mark of 50, at 48.6 in June, though it improved from 48.2 in May.
Meanwhile, revised estimates released by Markit and HSBC bank confirmed that manufacturing activity rebounded in June.
The HSBC manufacturing PMI, rose to 50.7 in June, missing the consensus estimate of 50.8, from 49.4 in May. This marked the first signs of improvement since December 2013. Flash estimates for June released earlier this month had pitched the index at 50.8.
New orders increased sharply, at the fastest pace in fifteen months in June. Production grew at the quickest rate since November 2013.
Purchasing activity grew while input costs rose for the first time since December 2013.
However, staffing levels eased for the eighth consecutive month in June.
Hongbin Qu,Chief Economist, China & Co-Head of Asian Economic Research at HSBC said, "This confirms the trend of stronger demand and faster de-stocking. The economy continues to show more signs of recovery, and this momentum will likely continue over the next few months, supported by stronger infrastructure investments."
He added, " However there are still downside risks from a slowdown in the property market, which will continue to put pressure on growth in the second half of the year. We expect both fiscal and monetary policy to remain accommodative until the recovery is sustained."
Notwithstanding the buoyant manufacturing reading, Capital Economics expressed concerns about the broader economy. The firm views that further targeted support measures may be needed to shore up growth, as the real estate sector looks set to remain a drag on the economy, given the growing inventories of unsold property.
