PMI turnaround lifts outlook (2)

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This improvement is consistent with headline activity indicators such as industrial production in July.

The National Bureau of Statistics showed a 9.7 percent year-on-year growth of industrial output in July, the highest level in five months.

"The August growth was mainly driven by the initial filtering through of recent fine-tuning measures and companies' restocking activities, despite continued external weakness," Qu said.

Zhu Haibin, chief economist in China with JPMorgan Chase and Co, does not expect any major significant stimulus measures because of the rebounding manufacturing sector.

"The government appears keen to selectively support infrastructure investment, including railways, urban basic facilities, as well as environmental and energy conservation industries, hinting at solid public sector fixed-asset investment growth in the coming months," Zhu said.

However, Standard Chartered Plc's chief Chinese economist Stephen Green expected only "a very gradual and fragile" recovery in the Chinese industrial sector in the coming months, based on his bank's prediction model covering new orders and finished-goods inventories.

"We expect the official and the HSBC PMIs to continue to hover between 50 and 53 in the coming months, with no dramatic improvement," he said.

The National Bureau of Statistics will release the official August PMI data on Sept 1. It focuses more on indicating the manufacturing situation of large and State-owned enterprises.

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