BEIJING, June 1 Reuters China39;s factory activity unexpectedly swung to growth in May from decline, a private sector survey showed on Thursday, driven by improved production and demand, helping struggling firms that have been hit by slumping profits.

The CaixinSP Global manufacturing purchasing managers39; index PMI rose to 50.9 in May from 49.5 in April, above the 50point index mark that separates growth from contraction.

The reading surpassed expectations of 49.5 in a Reuters poll, a stark contrast to a deeper contraction activity seen in the official PMI released on Wednesday.

China39;s recovery from its strict COVID curbs has been fragile and uneven, with economic indicators for April showing imports, factory gate prices and property investment all falling.

We need more time to see whether the improvement would be sustained, but it is a piece of good news for the Chinese economy, Zhou Hao, economist at Guotai Junan International, said in a note.

Further policy support is still required to boost domestic demand, we reckon a 10 bps MLF rate cut in June, he added.

The manufacturing subindexes showed factory output rose at the fastest clip in 11 months while new orders including new exports expanded in May.

Chinese stocks rose after the betterthanexpected PMI data, with the mainland39;s benchmark CSI 300 and Hong Kong39;s Hang Seng up roughly 0.6 each.

However, business confidence for the coming 12 months fell to a sevenmonth low amid concerns over global…