The IHS Markit Hong Kong Purchasing Managers' Index (PMI) rose to 50.1 in November from 49.8 in October, the first expansionary reading since March 2018. The 50-mark separates growth from contraction on a monthly basis.
Despite the positive reading, IHS said the PMI pointed to a stabilisation in activity following a deep contraction, rather than a sustained improvement.
"Business conditions across Hong Kong's private sector stabilised in November, according to the latest PMI data," said Bernard Aw, Principal Economist at IHS Markit. "However, a new wave of COVID-19 infections had dampened business confidence, with a renewed tightening of containment measures threatening to undermine the economic recovery."
Hong Kong leader Carrie Lam on Tuesday again urged residents to stay at home and avoid unnecessary family gatherings as the global financial hub scrambles to contain a rise in coronavirus cases.
The output gauge for November remained the same as previous month at 48.9, indicating a decline in demand, while business confidence, a forward-looking subcomponent in the survey, fell to 41.2 in further signs of pessimism.
(Reporting by Meg Shen; Editing by Sam Holmes)