The Australian dollar and share market have got a substantial boost from a turnaround in Chinese manufacturing.

HSBC's flash purchasing managers index (PMI) for China, which measures manufacturing activity, jumped from 48.1 last month to 49.7 in May.

That is a five-month high and only just off the key 50-point level that indicates growth in the sector.

HSBC's flash output index was even better, jumping from 47.9 to 50.3 - a four-month high.

The bank's chief economist for China Hongbin Qu says the pick-up was broad-based, with new orders and export orders back in expansionary territory.

"Some tentative signs of stabilization are emerging, partly as a result of the recent mini-stimulus measures and lower borrowing costs," he observed in the report.

"But downside risks to growth remain, particularly as the property market continues to cool. We think more policy easing is needed to put a floor under growth in the coming months."

TD Securities head of Asia-Pacific research Annette Beacher says the reading was well in excess of economist forecasts, which centred on a reading of 48.3.

"The last time the flash index jumped as much as 1.4 points was in August 2013, when it spiked 2.4 points and set the index back into the expansion zone for the following five months," she wrote in a note on the data.

Dollar, shares jump

That unexpectedly strong reading saw the Australian dollar jump from 92.25 US cents to just above 92.6 US cents around midday (AEST).

Ms Beacher says it is quite likely that strength may continue for a while, given some other factors pushing the Aussie dollar up and greenback down.

"The 1 per cent rise in the iron ore price overnight to $US98.50 and the dovish FOMC minutes should see the Australian dollar push higher over the course of the day."

The share market also rose on the better than expected PMI result and rebound in iron ore prices.

The All Ordinaries index was 1.1 per cent higher at 5,464 around 1:00pm (AEST), and the ASX 200 was 1.2 per cent higher at 5,488.

Mining stocks in particular have been buoyed by the Chinese data - Rio Tinto had gained 2.7 per cent, BHP Billiton 1.6 per cent and Fortescue Metals was 3.2 per cent higher.

The big banks were all rising, led by ANZ with a gain of 1.7 per cent.

James Hardie shares were 3.7 per cent higher after the firm more than doubled its full-year profit and boosted its dividend.