Manufacturing data for China is looking rosy as factory activity shot up at the fastest pace in 18 months.
According to a preliminary report by HSBC and Markit, which provides a flash measure of manufacturing, the purchasing managers' index (PMI) rose to 52 in July from 50.7 in June, beating a Reuter's poll forecast of 51.
The number hasn't been higher since January 2013, and boosts hopes that after much toing and froing the Chinese economy might make its growth target of 7.5 per cent after all.
The Chinese government at first said it would accept lower growth if jobs were still being created and the structure of the economy improved, then baulked and started a mini-stimulus programme.
Recently Chinese premier Li Keqiang indicated that a growth rate slightly lower than the 7.5 per cent target will not be a cause for concern, so long as wages are rising and the economy is creating jobs. This latest news will be a welcome boost as such statements seemed to imply China was bracing itself to miss.
Qu Hongbin, chief economist for China at HSBC, said:
Economic activity continues to improve in July, suggesting that the cumulative impact of mini-stimulus measures introduced earlier is still filtering through,
We expect policy makers to maintain their accommodative stance over the next few months to consolidate the recovery.
Chinese stocks were quickly up on the news, with share prices in the rest of Asia edging higher.