The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) came in at 50.8 in June, showing the highest reading since November.
It was the first time this year the reading reached above the 50-point level that separates expansion in economic activity from contraction.
"This month’s improvement is consistent with data suggesting that the authorities’ mini-stimulus are filtering through to the real economy," says Hongbin Qu, chief China economist at HSBC.
"Over the next few months, infrastructure investments and related sectors will continue to support the recovery. We expect policy makers to continue their current path of accommodative policy stance until the recovery is sustained," Qu adds.
"The reading doesn’t necessarily imply June growth has become incrementally much stronger as the index tends to lag," Gao Hua Economics Research writes in a report. "Though we believe sequential growth has been holding up and tracking close to our 7.5% year-on-year forecast."