Activity in China's key manufacturing sector recovered strongly in August, a preliminary survey of factory managers showed on Thursday, helped by a rebound in new orders.
The HSBC flash manufacturing Purchasing Managers Index (PMI) hit a four-month high of 50.1 in the month from a final reading of 47.7 in July, moving above the 50 threshold that demarcates expansion of activity from contraction.
"China's manufacturing growth has started to stabilize on the back of modest improvements of new business and output. This is mainly driven by the initial filtering through of recent fine-tuning measures and companies' restocking activities, despite the continuous external weakness," Hongbin Qu, chief economist, China & co-head of Asian Economic Research at HSBC said.
"We expect further filtering-through, which is likely to deliver some upside surprises to China's growth in the coming months," he added.