China’s manufacturing activity in December showed unexpected growth with the quickest pace for four months, Caixin PMI private business survey showed on Tuesday.

Caixin Purchasing Managers’ Index (PMI) posted 51.5 in December, slightly lower than the official reading of 51.6 but up from the November Caixin reading 50.8, to signal further improvement in the sector.

Anything above 50 is considered growth while a figure below that number points to contraction.

Improved sales and stronger underlying market demand were cited as key sources of growth in December. Meanwhile, the total new orders expanded at the fastest rate since August, with export sales also rising at a faster pace at the end of year, according to the Caixin release. 

The Caixin survey tends to focus on small and mid-sized firms which are believed to be more export oriented.

The reading shows surprising resilience in the economy at the end of the year when China was cracking down on air pollution by putting a cap on factories’ production and cooling down the property market.

However, Caixin survey said that manufacturers continued to shed staff in December and input costs continued to rise sharply, largely due to higher prices for raw materials, which also lead to an increase in sales prices. 

“Manufacturing operating conditions improved in December, reinforcing the notion that economic growth has stabilized in 2017 and has even performed better than expected. However, we should not underestimate downward pressure on growth next year due to tightening monetary policy and strengthening oversight on local government financing,” said Dr. Zhong Zhengsheng, director of Macroeconomic Analysis at CEBM Group.