The Caixin/Markit Purchasing Managers’ Index (PMI) came in at 52.8 for July, compared to 51.2 in June.
A reading above 50 indicates expansion, while one below shows contraction.
The survey indicates the quickest monthly expansion of manufacturing output and new orders since January 2011.
Meanwhile, new business from overseas fell at the slowest rate in six months.
The index beat analysts’ expectations and comes as China has largely contained the coronavirus crisis and most companies have resumed operations.
Nevertheless, employment dropped for the seventh consecutive month.
While some companies hired more workers to meet production needs, others laid off employees to cut costs, the survey showed.
“To increase employment, manufacturers will need more time and confidence,” said Wang Zhe, senior economist at Caixin Insight Group.
Official manufacturing data released last week also indicated a recovery.
The official manufacturing PMI came in at 51.1 in July compared to 50.9 in June.
China’s economy grew by 3.2 per cent in the second quarter of the year, according to official data, after contracting 6.8 per cent in the first quarter due to the coronavirus outbreak. (dpa/NAN)