China's July PMI rises to 2-yr peak at 51.7

BEIJING - China's manufacturing activity quickened to the highest level in more than two years in July, reinforcing signs that the economy is firming up on government support policies.

The purchasing managers' index rose to 51.7 in July, up from 51 in June, according to data released on Friday by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.

HSBC PMI picks up as policy easing kicks in

June PMIs in positive territory

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

The stronger-than-expected growth marked the fifth monthly recovery of the PMI, a widely watched indicator for the health of the world's second-largest economy.

The data is also in line with the HSBC final PMI reading of 51.7, which better reflects the performance of smaller businesses.

NBS statistician Zhao Qinghe attributed the strength to government growth-stabilizing policies and the improving external environment, which helped boost production and new orders.

In breakdown, the production sub-index came in at 54.2, the highest level yet in 2014, while the sub-index for new orders raced to its highest level since May 2012.

In particular, the PMI for small enterprises grew to 50.1 in July, the first time it went above the 50-point threshold since April 2012.

"The improving indices indicate economic growth will steadily gain strength," noted Zhang Liqun, an economist at the Development Research Center of the State Council.

After a shaky start this year, Chinese policymakers have pinned hopes on accelerating investment on railways and infrastructure, quickening fiscal spending, and selectively easing monetary policies to support faltering growth.