Chinese manufacturing activities hit a five-month high in July, data from the HSBC showed Tuesday, indicating that pro-growth measures have had an effect on the sector.
Preliminary figures from HSBC’s purchasing managers’ index (PMI), which gauges the manufacturing sector, rose to 49.5 in July from 48.2 in June, the banking giant said.
In addition, the index measuring manufacturing output also rebounded, reaching a nine-month high of 51.2 percent in July, compared with 49.3 in June, the bank said.
A reading above 50 suggests expansion, while below 50 indicates contraction.
“The rebound shows that the loosening policies adopted previously have produced results,” said Qu Hongbin, chief economist at HSBC China and co-head of Asian Economic Research at HSBC.
“However, the PMI figure remains under the boom-or-bust line of 50, indicating weak aggregate demand and increasing employment pressure, which will require more aggressive loosening measures to support growth and employment,” Qu said.
He said growth in the world’s second-largest economy is expected to show obvious improvements in the coming months as the government’s regulations continue to affect the market.
HSBC’s preliminary figure for the Chinese PMI is calculated based on 85 to 90 percent of the total responses to HSBC’s monthly PMI survey and is issued about one week before the final PMI reading.
The National Bureau of Statistics and the China Federation of Logistics and Purchasing will release official PMI data for July on Aug. 1. The official PMI data is based on a survey of purchasing managers in more than 820 companies in 20 industries.
The official PMI in June softened to a seven-month low of 50.2 percent.
The official PMI index covers more than 800 enterprises, including more state-owned and large enterprises, while HSBC’s poll includes around 400 small- and mid-sized companies.