China factories at two-year high

23 January 2013 Last updated at 22:23 ET

China's huge factory sector typically plays a major role in the blistering pace of growth in the country

Manufacturing activity in China grew at its fastest pace in two years in January, according to data from HSBC.

The preliminary reading of the Purchasing Managers Index (PMI) was 51.9, compared with 51.5 in December. Levels above 50 indicate expansion.

China's leaders have taken steps to boost the country's growth, of which manufacturing is a major component.

The data is the latest sign that the world's second-largest economy is recovering after a two-year slowdown.

"Despite the still tepid external demand, the domestic-driven restocking process is likely to add steam to China's ongoing recovery in the coming months," said Qu Hongbin, chief China economist at HSBC.

The HSBC preliminary reading, called Flash PMI, is a private survey of more than 420 companies. The responses of 85%-90% of the companies form the reading.

The last official PMI reading, the government's gauge, came in at 50.6 for December, a third month of expansion.

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