Markit’s manufacturing activity for China showed that the sector expanded at the fastest pace in four months during the month of December.

The Caixin Purchase Manager’s Index in the factory sector was seen rising to 51.5 in December.

This was a quick pick up from 50.8 that was registered in November. A reading above 50 in the PMI indicates expansion in the sector.

Data showed that output, new orders and export sales grew at a stronger pace during the month.

Capacity pressures were also seen building with increased backlogs of work.

The work force was seen declining however. Businesses were seen cuttingback on staff with the rate of job losses in the sector hitting a nine month low.

The inflationary pressures continued to remain elevated with input costs rising sharply.

The data suggests that consumer prices might increase in the near term.

The 12-month forward looking sentiment index showed that business outlook picked up from November but businesses were staying cautious.

Production growth was seen rising to a three month high on the back of better than expected sales and strong underlying demand.

New orders were seen rising at the fastest pace since August last year while exports continued to advance strongly.

Non-manufacturing PMI data was also released last week.  Activity in the non-manufacturing sector also grew strongly, rising to 55.0 in December, up from 54.8 in November.