Manufacturing seen increasing in August

Activity in China's manufacturing sector rose to an unexpected four-month high in August, the preliminary results of the HSBC Purchasing Managers' Index (PMI) showed Thursday, boosting hopes for stable growth in the coming months.

The Flash HSBC PMI, which covers smaller private enterprises, climbed to 50.1 in August from the previous month's final reading of 47.7, much higher than market expectations of 48.2.

A reading above 50 indicates expansion, while a reading below 50 points to contraction.

The rebound of the PMI reading was mainly driven by government measures to stabilize economic growth and restocking activities by enterprises, although the external economic weakness will continue, Qu Hongbin, chief economist at HSBC (China), said in the survey report.

Qu said he expected stable economic growth, given that the government's policies which will continue to have an effect in the coming months.

The 50.1 reading is "a nice big surprise for the markets," Lu Ting, China economist with Bank of America Merrill Lynch in Hong Kong, said in a research note sent to the Global Times Thursday.

China's official PMI, which covers State-owned and larger enterprises, is expected to be released by the China Federation of Logistics and Purchasing on September 1.

The official PMI is also "likely to see a rise, driven by the government's stimulus measures," Wang Jun, deputy director of the Consulting Research Department at the China Center for International Economic Exchanges, a government think tank, told the Global Times Thursday.

Most industry watchers are optimistic about the prospects for China's economy in the second half, but Lu Zhengwei, chief economist with Industrial Bank Co, sounded a note of caution.

"Fluctuation in economic growth is still likely in the coming year as the government's measures are part of a long-term strategy, with some of them having limited direct effect on economy straight away," he told the Global Times.