BEIJING, Feb. 25 -- China's manufacturing activity improved slightly in February thanks to increased output and new orders, according to HSBC's preliminary purchasing managers' index (PMI) released on Wednesday.

The HSBC flash manufacturing PMI for February rose to a four-month high of 50.1 from a reading of 49.7 in January, HSBC said in the report.

A reading above 50 indicates expansion, while a reading below that represents contraction.

The output sub-index stood at 50.8 in February, up from 50.3 in January, representing a five-month high, according to the monthly report.

"Today's data point to a marginal improvement in the Chinese manufacturing sector going into the Chinese New Year period in February. However, domestic economic activity is likely to remain sluggish and external demand looks uncertain," said HSBC chief China economist Qu Hongbin.

"We believe more policy easing is still warranted at the current stage to support growth," Qu added.

China's economy grew 7.4 percent in 2014, the weakest annual expansion in 24 years, but still in line with market expectations.