Private sector stays upbeat, business buoyant (2)

He added that Hong Kong's economy looks set to strengthen through year-end with healthy local job market conditions still underpinning domestic demand.

The PMI also noted that employment in the private sector rose for the third consecutive month in December as firms hired more staff to meet greater output requirements.

Input price inflation remains strong, despite easing slightly since November. Firms will manage to pass these excessive costs on to clients, the index indicated.

For the fourth quarter as a whole, the PMI reading averaged 51.5 - up from 50.2 in the third quarter, which was the highest quarterly reading since the first quarter of 2012, according to the bank.

"With the fourth quarter's average PMI notably stronger than the previous quarter's average, and retail sales growth holding firm, we should see further improvement in the next GDP release," Kwok said.

The University of Hong Kong projected on Thursday that the city's GDP growth would accelerate by up to 4.3 percent this year, from an estimated 1.3-percent growth in 2012, due to the recovery in external demand.

The International Monetary Fund's latest forecast in December also expected the Hong Kong economy to pick up to around 3 percent in 2013 as the drag from exports abates, after the Hong Kong government in November cut its 2012 GDP growth forecast further to 1.2 percent as economic expansion remained subdued in the third quarter.