(Photo : China's Megafactories)

HSBC's purchasing managers index (PMI) confirmed on Monday an increase in August after three months of continuous reduction. Another survey revealed on Sunday highlighted that the output increased to its highest in the past 16 months.

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Chinese economist Wei Yao from Societe Generale mentioned on his research note that the two reports are both showing an upward and improving trend that confirms the stronger growth momentum for the third quarter of this year.

According to HSBC, the country's PMI rose to as much as 50.1 in August, a much needed increase after the country's PMI has hit its all-time low in the past 11 months last July. New orders and output has slightly improved, and order backlogs increased. The HSBC survey is geared towards small and medium private businesses, cleared that the export demands had been declining due to a decrease in demand from Europe and the U.S.

Last Sunday, the official survey from the China Federation of Logistics and Purchasing also revealed that manufacturing has expanded for the two months consecutive, with in an increase to 51.0 from only 50.3 last July. The China Federation survey provides a massive representation of China's larger state-owned businesses that are less active in the export arena.

Both reports use the 100-point scale, and any numbers that are below 50.0 is an indication of reduction.

The improvements in China's PMI are sure to encourage leaders of China, who have been trying very hard to reverse the effects of the economic slowdown which have been pulling the country's growth to a 20-year low of 7.5 percent from the previous quarter.

Qu Hongbin, HSBC's chief China economist, comments about the country's growth in the manufacturing sectors which have started to become more stable because of the new orders and output. These were all attributed to the businesses' activities dealing with stocks renewals.

Signs of economy's improvements also involved a 5.1 percent increase in exports.