China manufacturing activity hits 4-month high

China's manufacturing activity grew to a four-month high in February thanks to increased output, preliminary results of a business survey by Markit Economics and British bank HSBC Ltd. showed Wednesday.
The HSBC Flash China Manufacturing Purchasing Managers Index (PMI), a gauge of nationwide manufacturing activity of the Chinese economy, rose to 50.1 percent, up from January's final reading of 49.7 percent on a 100-point scale. The February index was the highest since October, and regained the key 50 percent line for the first time in three months. A PMI reading above 50 percent indicates growth from the previous month, while a reading below 50 represents contraction in China's manufacturing sector.
The index is a closely watched barometer of the health of the world's second-biggest economy. "Today's data point to a marginal improvement in the Chinese manufacturing sector going into the Chinese New Year period in February," HSBC economist Qu Hongbin said in a statement accompanying the data. "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," said Qu. The HSBC PMI samples more than 420 small and medium-sized manufacturing enterprises. Among the sub-components, the manufacturing output index increased to a five-month high, according to the survey. China's economic growth grew 7.4 percent in 2014, slower than the 7.7 percent in 2013 and the weakest annual expansion since 1990, when it recorded the 3.8 percent growth.