China's official manufacturing Purchasing Managers' Index (PMI) showed the industrial sector continued to expand in January and a tad faster than expected, as the mainland economy shows signs of stabilizing.
The manufacturing PMI came in at 51.3 in January, down a smidgen from 51.4 in December, but still better than a Reuters poll forecast of 51.2.
A reading above 50 indicates expansion, while a reading below signals contraction.
The official figures tend to focus on larger companies. The private China Caixin PMI, which focuses on smaller and medium-sized firms, is out Feb. 3. with markets in Chin a shout through Thursday to mark the Lunar New Year.
The official non-manufacturing PMI, which takes a reading on the services sector, rose to 54.6 in January from 54.5 in December.
Capital Economics' China economist Julian Evans-Pritchard said in a note on Wednesday that the manufacturing data was still quite strong, despite a slight decline, as it was only a tad off the two-year high of 51.7 touched in November.
"The breakdown suggests that an acceleration in service sector activity offset a slowdown in the construction sector, which has been hit by the cooling property market and a reduction in fiscal support," he said. "The upshot is that China's recent recovery appears to remain largely intact for now."
The Australian dollar slipped as low as $0.7560 after the data, compared with around $0.7576 before the release. China is a key market for Australia's commodity exports. The currency move, however, may also have been dictated by a slight uptick in the U.S. dollar.