2014.06.2302:46:00UTC+00China Factory Activity Expands For First Time In Six Months

Chinese manufacturing sector expanded for the first time in six months in June driven by domestic and foreign orders, flash data from Markit Economics showed Monday.

The HSBC flash manufacturing Purchasing Managers' Index rose to 50.8 in June, a seven-month high, from 49.4 in May. Economists had expected the index to come in at 49.7.

Similarly, at 51.8, the manufacturing output index hit a seven-month high, rising from 49.8 posted in May. New orders as well as export orders increased in June, while employment contracted at a slower rate. Output prices fell into contraction, while input prices rebounded.

The final estimate, along with a more detailed report, is set to be released on July 1.

Hongbin Qu, chief economist, China & Co-Head of Asian Economic Research at HSBC said, the improvement in manufacturing is consistent with data suggesting that the authorities' mini-stimulus are filtering through the real economy.

China has rolled out series of stimulus measures recently to cushion economic recovery, giving thrust to spending on railways and public housing.

Hongbin said infrastructure investments and related sectors will continue to support the recovery over the coming few months. The economist expects policymakers to continue their current path of accommodative policy stance until the recovery is sustained.

Julian Evans-Pritchard, China economist at Capital Economics said the strength in activity extended into June. This supports the assessment for GDP growth of 7.4 percent in the second quarter, unchanged from the previous quarter. The government target about 7.5 percent growth this year.