Preliminary PMI suggests slight manufacturing rebound

China's overall manufacturing activity may reach a five-month high in July, a July 24 economic indicator showed.

The month's preliminary Purchasing Managers' Index rose to 49.5 from 48.2 in June, according to the Hong Kong bank HSBC Holdings Plc.

A PMI of more than 50 reflects expansion in manufacturing, while one less than 50 indicates contraction.

The PMI subindex that shows manufacturing output jumped to 51.2 this month, a nine-month high, from 49.3 in June, and that was the main reason the PMI went up, the HSBC report said.

However, the PMI's employment subindex fell to its lowest level since March 2009, with a reading of 47.4, off from June's 48.8. It was the fifth consecutive month that the subindex had fallen below the breakeven point of 50.

As the PMI still shows contraction and demand remains weak, "this calls for more government efforts to support growth and jobs," said Qu Hongbin, HSBC's chief economist in China.

He said the consumer price index may continue falling in July, which would spur the central government to further loosen policies. "A more meaningful improvement of growth is expected in the coming months when these measures take hold," he said.