China's manufacturing activity appears to be exiting its recent contraction, preliminary data from HSBC showed Wednesday. The "flash" version of the HSBC/Markit manufacturing Purchasing Managers Index for February showed a rebound to 50.1 -- a four-month high -- up from a final read of 49.7 in January. The result marked a return above the 50 level separating expansion from contraction. Output and overall new orders also showed an increase at a faster rate than the previous month, but new export orders swung to a decrease, and the employment subindex showed contraction at a faster rate than in January. In a statement released along with the data, HSBC chief China economist Hongbin Qu said: "Today's data point to a marginal improvement in the Chinese manufacturing sector going into the Chinese New Year period in February. However, domestic economic activity is likely to remain sluggish, and external demand looks uncertain. We believe more policy easing is still warranted at the current stage to support growth." The flash PMI usually contains about 85%-90% of the total responses used for the final report, which is next due out March 2. Chinese stocks cut their losses after the report came out, with the Hang Seng Index flat compared to a 0.1% drop ahead of the numbers, while the Shanghai Composite was down 0.1%, trimming a 0.3% deficit.
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