Chinese July manufacturing PMI points to growth for first time since February 2015

Activity in China´s manufacturing sector grew again in July for the first time in a year, pointing to continued economic momentum in the third quarter of 2016 according to some economists.

Caixin´s manufacturing sector purchasing managers´ index rose from a reading of 48.6 in June to 50.6 in July, crossing the 50.0-point threshold which denotes an expansion for the first time since February 2015.

That reading was far above the print of 48.8 which economists had been anticipating.

"The upshot is that today’s data suggest that the acceleration in growth signalled by our China Activity Proxy at the end of Q2 may have continued into this quarter. Admittedly, unresolved structural issues mean this pick-up is on borrowed time and we still expect growth to slow again next year. Nonetheless, with the delayed impact of stronger credit growth still feeding through to the real economy, we expect further improvement in the data out of China in the short-run," Julian Evans-Pritchard, China economist at Capital Economics, said in a research note sent to clients.

Nevertheless, a gauge of export orders continued to lag behind a sub-index tracking new orders, suggesting that it was stronger domestic demand which lay behind the improvement in the headline PMI.

An official manufacturing sector PMI also published on Monday morning by the National Bureau of Statistics slipped from 50.0 to 49.0.

However, a similar survey referencing conditions outside of manufacturing improved from 53.7 to a seven-month high of 53.9, led by increased activity in construction.