China August manufacturing PMI rises unexpectedly, but economists wary

Factory activity in Asia's largest economy registered an unexpected pick-up in August, official data revealed, but some economists were mistrustful.

The government compiled purchasing managers' index advanced from a reading of 51.4 for July to 51.7 in August.

Economists had expected a reading of 51.3.

However, according to Julian Evan's Pritchard at Capital Economics the unforeseen rebound might be the result of higher output of industrial metals, stoked by higher prices.

Furthermore, in the past the official PMIs had sent false signals with the private sector-compiled Caixin PMI having proven a more reliable guide, he said.

Indeed, the details of the report suggested foreign demand had in fact weakened, although domestic strength had acted as an offset.

"Looking ahead, if we are right to believe that tighter policy will continue to weigh on investment spending in the coming quarters, then we doubt that the current pace of industrial output growth can be sustained for long."

Julia Wang at HSBC on the other hand seemed to have a more positive take on matters.

"Going into 2H, growth momentum looks to have softened somewhat. However, the magnitude of the slowdown so far has been modest, and less than the market had feared. We expect certain parts of the economy, such as the housing market to cool a little more in the next few months. Policy makers are also playing a delicate balancing game with 'financial de-leveraging' policies. But the underlying economy remains resilient, thanks to the manufacturing recovery. This should remain a key pillar of growth in the coming months, giving policy makers more space to move ahead with their reform agenda."