China's official Composite PMI Output Index, which measures overall business output and operational activities in the country, rose to 50.6 in June from 50.5 in May, according to data from the National Bureau of Statistics on Tuesday.
A reading above 50 indicates expansion, while a figure below signals a contraction. The latest print marked the highest since the 50.7 reading in December 2025.
The improvement was driven by synchronized momentum between the index's two core components.
Chinese factory activity accelerated in June on a surge in computer, communication, and electronic equipment manufacturing. The official manufacturing Purchasing Managers' Index or PMI came in at 50.3 from a neutral reading in May.
The reading was also better than the consensus forecast of 50.2 tracked by Investing.com.
Manufacturing PMI for the computer, communication and electronic equipment segment stood at 54 in June, NBS Statistician Huo Lihui said in a press release.
The PMI for high-technology manufacturing was at 53.5, higher than the overall manufacturing sector. The rise signals more confidence in the sector, Huo said.
"The development of high-end manufacturing continued to improve and its leading role was further strengthened," Huo said in his statement accompanying the release.
Among the main sub-indices, the new orders index climbed to 51.2 from 49.9, the raw materials inventory index fell to 48.4 from 48.6, and the supplier delivery time index rose to 49.9 from 49.2 in May.
The employment index edged up to 48.5 from 48.6, the NBS said.
Meanwhile, business activity in China's non-manufacturing sector expanded in June, with the official non-manufacturing PMI coming in at 50.2, above the 50.1 reading in May and beating the consensus forecast of 49.9 tracked by Investing.com.
The new orders index climbed to 48 from 45 while the input price index fell to 49.7 from 52.2.
The non-manufacturing employment index edged up to 45.8 from 45.6, while the business activity expectation index came in at 55.3, up from 54.8 in May.
By industry, the business activity index for the services sector rose to 50.4 from 50.3 in May.
The subindex for the construction industry remained in contraction territory at 49 but improved from the 48.8 reading in May.
While the indicators increased above forecasts, the June release should be seen as a "moderately positive surprise for markets," Bloomberg quoted Guotai Junan International Holdings (HKG:1788) Chief Economist Hao Zhou as saying.
Despite the rises, recovery remains uneven as employment and manufacturing inventories are still within contractionary territory, Hao reportedly said.
China's pivot to a domestic demand-driven economy also shows a "sputtering" of the growth engine, and policy support will be needed to ensure balanced growth in the run-up to the Politburo meeting in July, ING Think Chief Economist Lynn Song said in a separate note.
