China's factory sector put in its best performance in four months in May as export orders rebounded although activity remained in contraction territory, a HSBC survey showed on Tuesday.
The final reading of the HSBC/Markit purchasing managers' index (PMI) rose to 49.4 in May from 48.1 in April but was below an initial estimate of 49.7.
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The new export orders sub-index rose to a four-year high of 53.2 in May from April's 48.9, but the new orders sub-index barely stopped contracting in a sign that domestic demand remains sluggish even as global demand improves.
"I think it (the rebound in export orders) is encouraging and we need to see more of that," said Louis Kuijs, chief economist for Greater China at RBS.
"Exports are coming along and the news that we get from other Asian countries suggests that the global trade cycle is starting to get better," he added.