Greek factory activity expanded in December on the back of a strong rise in production despite shortages of materials, with manufacturing firms adding workers, a survey showed on Monday.

IHS Markit's Purchasing Managers' Index (PMI) for manufacturing, which accounts for about 10% of the Greek economy, rose to 59.0 in December from 58.8 in November, signaling an improvement in the health of the sector.

The index remained well above the 50 mark, which indicates that activity is expanding.

"Greek manufacturers signaled an encouraging end to 2021 as production expanded at a faster pace and client demand remained sharp despite ongoing challenges regarding supply-chain disruptions," said senior IHS Markit economist Sian Jones.

Production rose at the fastest pace in three months amid reports of a sustained increase in client demand.

While new order growth slowed to its softest pace in five months at the end of 2021, it stayed steep overall. Some firms reported that clients were hesitant to place orders amid substantial hikes in charges.

Manufacturers added staff at the fastest rate since February 2020.

"Hiring activity was stepped up to an extent not seen since before the escalation of the pandemic," Jones said, adding that input buying was ramped up at the fastest clip since February 2000 as firms tried to stockpile materials amid shortages.

Port congestion and material shortages led to another substantial rise in input costs, albeit the slowest since August. Firms continued to pass on higher costs to clients where possible, raising selling prices at a marked pace.

"Manufacturers were broadly upbeat regarding the outlook for output over the coming year as expectations reached a six-month high. The recent emergence of the Omicron variant is likely to temper sentiment into the opening quarter of 2022," Jones said.

(Reporting by George Georgiopoulos; Editing by Hugh Lawson)