China's manufacturing activity contracted for a fourth straight month in April, a private survey showed on Wednesday, but the reading showed an improvement from March.
The flash Markit/HSBC Purchasing Managers' Index (PMI) came in at 48.3, better than the final reading of 48 in March, but still below the 50-mark which demarcates expansion and contraction.
"The best thing we can say [about China's economy] is stabilization. It's not really an improvement.," said Frederic Neumann, managing director and co-head of Asian economics research at HSBC.
"Usually the PMI actually improves around April but the pickup here is been rather muted, only 0.3 points. if you look at the details, [it] doesn't seem like the economy is really pulling out of a rut," he added.
The Australian dollar, typically sensitive to China data given Australia's huge trade links with the mainland, fell against the U.S. dollar following the news, at $0.9302. The Aussie was already falling on weaker-than-expected local inflation data.
According to Zhiwei Zhang, China economist at Nomura, who expected the figure to come in below 48, the data does not allay concerns of a slowdown in the world's second biggest economy.
'"The HSBC PMI number is actually looking more at the exporters rather than firms that serve the domestic demand. So export sector is probably picking up but to keep in mind that China's economy nowadays is much more driven by domestic rather than exports," Zhang said.
"The property sector is now the pillar for growth, not export anymore. And property indicators show real estate activity slowing down very fast and that's the reason why we're very worried about the second-quarter GDP," he added.