China’s manufacturing activity expanded in June to the highest in three years, according to a private survey, diverging again with official data that reflected weakness in factories.

The Caixin manufacturing purchasing managers index climbed to 51.8 last month. That compared with a median forecast of 51.5 by economists polled by Bloomberg. Any reading above 50 suggests expansion.

The data came after the official manufacturing PMI published Sunday showed factory activity contracted for the second straight month in June, signalling sluggishness in a sector that has been driving economic growth. The two surveys cover different sample sizes, locations and business types, with the Caixin poll focusing on smaller and export-oriented firms.

Strong exports have kept production lines at Chinese factories humming this year while domestic demand remained stubbornly subdued. The prospects for overseas shipments are uncertain amid rising trade barriers erected by major partners such as the US, European Union and Brazil, while the nation’s businesses and consumers are reluctant to spend due to persistent property slumps and a gloomy job and income outlook.

Also over the weekend, data showed that the downturn in China’s residential real estate sector slowed further in June. The prolonged property slump has hampered an economic recovery, prompting the government to put a floor under the housing market in some of its biggest cities.

  - Bloomberg