Early figure points to mild rebound in manufacturing

China's manufacturing activity may have a mild rebound in April given that a preliminary survey reading improved to a two-month high.

The HSBC Flash China Manufacturing Purchasing Managers' Index, the earliest available indicator of China's industrial sector's vitality, returned to 48.3 in April from March's final reading of 48, said HSBC Holdings Plc and research firm Markit today.

The HSBC PMI is weighted toward private and export-oriented companies and a reading below 50 means contraction. The latest figure posted the fourth straight month of contraction.

Qu Hongbin, chief economist for China at HSBC, said China's manufacturing activity seemed to be stabilizing in April.

"The domestic demand showed mild improvement and deflationary pressures eased," Qu said. "But downside risks to growth are still evident as both new export orders and employment contracted."

The State Council, China's equivalent of a cabinet, released new measures to support growth and employment after the first-quarter economic growth eased to 7.4 percent. The measures included smaller reserve requirements for rural banks and acceleration of railway construction.

"While initial impact will likely be limited, they signaled readiness to do more if necessary," Qu said, adding more measures may be unveiled in the coming months and the central bank will keep liquidity sufficient.