The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) rose to 49.7 in May from April’s 48.1, hitting a five-month high.
"The improvement was broad-based with both new orders and new export orders back in expansionary territory," says Hongbin Qu, chief China economist at HSBC. "Dis-inflationary pressures also eased over the month and output prices increased for the first time since November 2013."
"Some tentative signs of stabilization are emerging, partly as a result of the recent mini-stimulus measures and lower borrowing costs. But downside risks to growth remain, particularly as the property market continues to cool," he adds.
The employment sub-index fell further to 47.3. Qu says it implies that this month’s uptick in sentiment has not yet filtered through to the labor market.