Hong Kong Oct PMI marks fastest growth since Dec 2007

* HK business activity up in October for third month

* Pace of growth accelerates, strongest since December 2007

* Employment rises slightly for first time in 12 months

HONG KONG, Nov 4 - Data from the HSBC Hong Kong Purchasing Managers' Index for October:

KEY DATA

Oct Sep Aug Jul Jun May Apr Mar Feb HK PMI 54.6 51.8 52.8 49.9 47.1 44.8 44.3 42.7 40.6

CONTEXT:

* The PMI adds to recent economic data showing Hong Kong's economy is picking up after pulling out of recession in the second quarter. Business activity rose in October for a third straight month as the PMI hit 54.6, up from 51.8 in September and its highest reading since December 2007.

* New orders rose for a fourth straight month and at a much faster pace than in September although the pace of growth in new orders from mainland China was only slightly better than in September.

* Companies began hiring again for the first time since October last year although hiring was very limited.

* Companies' costs (input prices) rose for a fourth month and more sharply than in September, mainly due to a marked increase in raw materials prices. Firms had to reduce output prices for a 13th month but by a very small margin.

* The PMI accurately indicated Hong Kong's descent into recession in the third quarter of 2008. A PMI reading above 50 indicates growth in activity, below 50 signals contraction.

* The PMI survey compares business conditions with those a month earlier, based on data from 300 private Hong Kong companies in manufacturing, services, retail and construction.

QUOTE FROM HONGBIN QU, CHINA CHIEF ECONOMIST AT HSBC, SPONSOR OF THE HONG KONG PMI:

"The faster expansion (in the October PMI) is more broad-based compared with the previous month. In particular, the marked improvement in new orders has led to stronger production expansion and prompted companies to hire additional workers.

"As a result, the employment index returned to slightly above the 50-neutral level for the first time since October 2008. Yet, since companies are still suffering from margin squeeze, with output prices falling and input prices accelerating, this may restrict the pace of hiring new workers in the coming months."

The data is collected by UK-based Markit Group Ltd, and the report is now sponsored by HSBC. For more details, click http://www.markit.com/information/register/reuters-pmi-subscriptions (For more stories on the Hong Kong economy, click on [HK-MCE-RTRS-LEN]) (To read more PMI reports from around the world, click on [PMI-MCE-RTRS-LEN])