A labourer cuts scrap steel at a factory of Dongbei Special Steel Group Co., Ltd., in Dalian, Liaoning province, July 24, 2013. Reuters/China Daily

A preliminary reading of the purchasing managers’ index, or PMI, released by HSBC-Markit on Thursday showed activity in China’s manufacturing sector accelerated to a seven-month high in October, to hit 50.9 from 50.2 in September, and beating expectations of a 50.5 reading.

The expansion was fuelled by a faster rate of output, and new orders from the domestic and export markets. However, employment in the manufacturing sector declined but at a slower rate compared to September, even as output and input prices increased.

“October’s HSBC Flash China Manufacturing PMI rose to a seven month high of 50.9 on the back of broad-based modest improvements,” Hongbin Qu, a senior economist at HSBC, said in a statement.

“This implies that China’s growth recovery is becoming consolidated into 4Q following the bottoming out in 3Q. This momentum is likely to continue in the coming months, creating favorable conditions for speeding up structural reforms.”