BEIJING (Reuters) - Growth in China's factory sector accelerated to a six-month high in September, a preliminary survey showed on Monday, as stronger domestic and foreign demand added to recent signs of a tentative turnaround in the world's second-largest economy.

The flash HSBC Purchasing Managers' Index (PMI) climbed to 51.2 last month from August's 50.1, hitting a high not seen since March. A breakdown of the data showed ten of 11 sub-indices rose in September.

The flash PMI gives the earliest reading of China's monthly economic performance, and should cheer investors worried about a sharp economic slowdown after a previous rebound in activity proved short-lived.

Notably, new export orders jumped to a ten-month peak of 50.8, up sharply from August's 47.2. It was the first time in six months that exports -- an Achilles' heel in China's economy -- had shown growth in the PMI.

A PMI reading over 50 points indicates expanding activity while one below that suggests contraction.

Monday's PMI joins other data earlier this month suggesting China's economy has bottomed out, with factory activity growing at its fastest in 17 months in August, comfortably surpassing expectations.

Exports also fared better than expected last month, as sales to southeast Asia and the United States boosted performance

Qu Hongbin, a HSBC economist, said the pick-up in manufacturing would give China's authorities scope to restructure the economy and boost domestic consumption, thereby cutting dependence on exports and investment.

"We expect a more sustained recovery as the further filtering-through of fine-tuning measures should lift domestic demand," Qu said.

"This will create more favourable conditions to push forward reforms, which should in turn boost mid- and long-term growth outlooks."

While the PMI report shows China's economy is on the mend, any recovery would likely be bumpy as the government's quest for better-quality growth weighs on activity in the near term.

Having ruled out the use of any large fiscal stimulus in the latest slowdown, authorities have instead taken policy action on the margins to shore-up activity, including quickening railway investment and public housing construction.

Beijing has set a growth target of 7.5 percent this year, already the weakest expansion in over two decades. Though some investors had feared China could miss the target, officials have been adamant that it can be met.

(Reporting by Koh Gui Qing; Editing by Shri Navaratnam)

 

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