The official purchasing managers index (PMI) hit 51.0 last month, the National Bureau of Statistics said in a statement. The figure is up from 50.8 in May and the best since a similar reading of 51.0 in December.
The index tracks manufacturing activity in China’s factories and workshops and is a closely watched indicator of the health of the economy. A reading above 50 indicates growth, while anything below points to contraction.
The result, however, was marginally below the median 51.1 forecast in a survey of eight economists by Dow Jones.
Separately, a private survey published by British bank HSBC put China’s PMI at 50.7 in June — slightly below the preliminary reading of 50.8 released last month but well above May’s 49.4. The expansion was the survey’s first since December.
Authorities have since April rolled out a series of measures to bolster growth, including tax breaks for small enterprises, targeted infrastructure outlays and incentives to encourage lending in rural areas and to small companies, steps dubbed as “mini-stimulus” by economists.
“The continued recovery in manufacturing comes despite subdued property sales data for June,” Julian Evans-Pritchard, China economist for Capital Economics, said in a report.
“It therefore appears that the downwards pressure on the economy from the property sector is still being offset by the recent state-led rebound in infrastructure investment as well as healthy external demand.”
House prices in major Chinese cities fell for a second consecutive month in June, an independent survey showed Monday, providing more evidence of a deflating property bubble.
The average price of a new home in 100 major cities was 10,923 yuan ($1,775) per square metre last month, down 0.50 percent from May, the China Index Academy (CIA) said in a regular monthly survey.
“The economy continues to show more signs of recovery, and this momentum will likely continue over the next few months, supported by stronger infrastructure investments,” Qu Hongbin, HSBC’s chief China economist, said in comments accompanying HSBC’s announcement.
But he cautioned that “downside risks” in the property market will remain a negative factor.
The PMI data comes after China said earlier this year that economic growth for the first quarter of 2014 hit its weakest pace in 18 months.
Gross domestic product grew 7.4 percent year on year in January-March, weaker than the 7.7 percent in October-December.
The result was the worst since a similar 7.4 percent expansion in the third quarter of 2012.
China in March set its annual growth target for this year at about 7.5 percent, the same goal as 2013.
Officials including Premier Li Keqiang earlier this year stressed that the target was flexible — seen as a hint it may not be achieved.
Last month, however, Li called achieving it the “inescapable responsibility” of local governments and urged “no delay” in action, an indication of official concern.
“We expect Beijing to continue rolling out a slew of small-scale measures to deliver the around-7.5 percent annual growth target,” Bank of America Merrill Lynch economists Lu Ting and Zhi Xiaojia said in a research note.
China’s leadership says it wants to make private demand the key driver for the country’s economic growth, moving away from over-reliance on huge and often wasteful investment projects that have girded decades of expansion.
Such a makeover is expected to result in growth that is slower but seen as more sustainable in the long run.