The Nikkei Hong Kong Purchasing Managers’ Index (PMI), compiled monthly to gauge sentiment in the city’s private sector, using questionnaires sent to more than 300 companies, rose from 51.1 in June to 51.3 last month. A PMI figure above 50 indicates private sector activity is expanding, while a sub-50 score indicates contraction. Although the monthly index rise was just 0.2, the latest reading was the strongest in almost three and a half years.

“The latest PMI reading was the best in nearly three-and-a-half years, reflecting stronger growth in both output and new orders. Especially encouraging was a further increase in export sales to China. A stronger yuan partly contributed to higher export growth,” said Bernard Aw, principal economist at IHS Markit, which runs the survey.

“However, business sentiment became more negative despite improving demand. Companies remained concerned about a still-weak economic climate, anticipation of higher US interest rates, rising prices for raw materials and greater competition. That may limit the sustainability of the current upturn.” The report stated that export orders from the mainland recorded their largest jump since February 2014.

Companies in Hong Kong have also hired more people, with employment numbers rising for three consecutive months.

Last month, Hong Kong’s Financial Secretary Paul Chan Mo-po said the city’s economy was growing faster than expected and there was “a high chance” the government would raise its forecast for the year by half a percentage point from the original 2-3 per cent. He said at the time the year-on-year growth figure in the second quarter would not be as high as the 4.3 per cent seen in the first, as the base figure on which comparisons were made had been unusually low in the first quarter of 2016. But he said growth in the first half was expected to beat forecasts.