HSBC bank says growth in China's factories accelerated to a two-year high in January, as manufacturers received more local and foreign orders, showing the country’s economy is recovering.

The bank’s flash purchasing managers' index rose to 51.9 in January, the highest since January 2011 and the above 50-point level shows accelerating growth against the previous month. HSBC says the sub-indices for output, new orders and employment that account for three quarters of the PMI all improved in January to hover above 50.

The output index climbed to 22-month highs while the employment sub-index was at its highest since May last year. The new export orders sub-index rose to 50.1 in January, up from December’s 49.2 that pointed to waning demand.

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