Manufacturing activity in China continued to improve in November, according to figures released today (2 December), with output and new order growth increasing at their strongest rate in eight months.

The purchasing managers' index (PMI), which is compiled by information services provider Markit and released by banking giant HSBC, came in at 50.8 for the month. While this is little-changed from 50.9 in October, it was the second-highest index reading in eight months.

A reading above 50 indicates an expansion in manufacturing activity from the previous month, while a reading below indicates contraction.

Production levels at Chinese manufacturers increased for the fourth month running in November, and at the fastest rate since March.

Growth was supported by a quicker expansion of total new business. However, with new export orders rising at a fractional pace, this suggests that growth was largely driven by domestic demand.

According to anecdotal evidence, HSBC said, improved business conditions and the launch of new products boosted volumes of new work.

Despite the greater volume of new business, manufacturers cut their staffing levels in November, reversing a slight expansion of payroll numbers in October. That said, the rate of job shedding was only marginal.

Consequently, backlogs of work continued to increase in November. Moreover, the rate of backlog accumulation was the second-strongest in over two years.

Purchasing activity increased over the month in response to greater output requirements, although the rate of increase slowed from the previous month to a modest pace.

Conversely, stocks of purchases held by Chinese manufacturers declined slightly in November, with a number of firms attributing the reduction to increased production.

Average input costs faced by Chinese goods producers increased for the fourth consecutive month, with higher raw material prices reported across both national and international markets.

Firms chose to partially pass on their higher cost burdens to clients in November, and raised their selling prices marginally. Moreover, it was the weakest rate of output charge inflation in four months, with some firms lowering their prices in an effort to boost sales.

HSBC's index is based on responses from purchasing executives at 420 manufacturers across a range of industries.