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China manufacturing improves, nation still in contraction: HSBC

BEIJING -- China's manufacturing activity improved in April but remained in contraction, HSBC said Monday, bolstering the case for the government to give a boost to the world's number two economy.

HSBC's purchasing managers index (PMI), which measures factory output, rose to 49.1 in April, up from 48.3 in March, the British banking giant said in a statement.

A reading above 50 indicates expansion, while a reading below 50 suggests contraction. The bank's data marks the sixth straight month the reading remained in contraction.

HSBC's chief economist for China, Qu Hongbin, said the data suggested government measures to spur the economy were having an impact and “should ease concerns of a sharp growth slowdown.”

“That said, the pace of both output and demand growth remains at a low level in an historical context and the job market is under pressure. This calls for additional easing measures in the coming months,” Qu said in the statement.

Other analysts echoed that view, saying the government will need to further ease monetary policy, most likely through a cut in reserve requirements for banks.

“The pick-up in PMI has reduced worries over China's economic growth, but it will not affect the overall loosening trend for China's monetary policy,” You Hongye, an analyst at Essence Securities in Beijing, told AFP.

China economy grew by 8.1 percent in the first quarter of this year, its slowest pace in nearly three years, putting pressure on Beijing to loosen its monetary policy.

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