China Manufacturing Gauges Improve in July

BEIJING--Two closely watched gauges of manufacturing activity in China improved in July, the latest sign of recovery in the sector.

The official manufacturing Purchasing Managers Index rose to 51.7 in July compared with 51.0 in June, marking a 27-month high, the National Bureau of Statistics said Friday.

July's PMI also was higher than the 51.4 median forecast of nine economists polled earlier by The Wall Street Journal.

Analysts said a combination of stronger exports and government stimulus measures had boosted the manufacturing sector.

The subindex of small businesses' manufacturing activity rose to 50.1 in July, the first time the reading topped 50 since April 2012. The new orders subindex rose to 53.6, the highest level since May 2012.

A PMI reading above 50 indicates an expansion in manufacturing activity from the previous month, while a reading below that indicates contraction.

Separately, the HSBC China Manufacturing Purchasing Managers' Index, rose to an 18-month high of 51.7 in July compared with 50.7 in June, HSBC Holdings PLC said.

"Policy makers are continuing with targeted easing in recent weeks and we expect the cumulative impact of these measures to filter through in the next few months and help consolidate the recovery," HSBC's chief economist for China, Qu Hongbin, said in a statement.

The subindex for new export orders also increased at its second-fastest pace in more than three years, HSBC said.

The final HSBC PMI reading was down somewhat from HSBC's preliminary July PMI of 52.0, announced last week. The preliminary figure is based on 85% to 90% of responses to its PMI survey.

HSBC's PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in more than 420 manufacturing companies.

--Grace Zhu and Richard Silk