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China's manufacturers are expanding at an accelerated pace, according to the HSBC Purchasing Managers' Index™. After adjusting for seasonal factors, the index hit a two-year high in January at 52.3, up from 51.5 in December, signalling a modest improvement in operating conditions for the third successive month. The Flash PMI™ earlier this month showed a headline figure of 51.9.

Output in the manufacturing sector rose for the third month in a row. The rate of expansion accelerated and is now at a marked pace, the quickest since March 2011. New orders increased at a solid pace, the sharpest in two years. Purchasing activity also rose at the fastest rate in two years, which is attributed to new order growth. New export orders turned upward after a drop in December, with signs of strengthened demand in Europe and the US. Backlogs of work increased after five months of reduction, while employment levels rose marginally.

Inflation remained modest though input prices rose at the quickest rate since September 2011. Suppliers' delivery times increased for the fourth successive month after higher demand for supplies.

The HSBC PMI™ gives a snapshot of operating conditions in manufacturing and is based on a survey of purchasing executives in more than 400 companies. Any figure above 50 shows manufacturing growth, while below 50 signals contraction.

Qu Hongbin, Chief Economist, Greater China, and Co-Head of Asian Economic Research at HSBC, said: "A higher reading of January's final manufacturing PMI™ implies that China's manufacturing activity is gaining further steam on the back of improving domestic conditions. We see increasing signals of a sustained growth recovery in the coming months: the steady investment growth led by infrastructure projects, the improving labour market conditions boosting consumer spending, and the ongoing re-stocking process to lift production growth."

The Flash China Manufacturing PMI™ is due for release on 25 February.

The intellectual property rights to the HSBC China Manufacturing PMI™ provided herein is owned by Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit's prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information ("data") contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are trade marks of Markit Economics Limited, HSBC use the above marks under licence. Markit and the Markit logo are registered trade marks of Markit Group Limited.

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