China’s Manufacturing PMI Falls to 49.3 in October, Below Reuters’ Forecast
Key Facts
China’s official manufacturing Purchasing Managers’ Index fell to 49.3 in October from 50.1 in September, below the 50.0 average forecast in a Reuters poll, according to data published by the National Bureau of Statistics of China on October 31. A reading below 50 indicates contraction, after the index crossed that threshold in September for the first time in two months. October marked the fastest pace of contraction in three months. In September, the index had risen from 49.8 in August before turning back into contraction. The decline puts weak factory demand back in focus, with new orders, exports and output indicators all falling during the month.
The National Bureau of Statistics attributed the manufacturing decline in part to some demand being brought forward ahead of the National Day holiday and to a more complex international environment. The output index fell to 49.8 in October from 51.7 in September, while the new orders index declined to 49.4. The bureau said the output and new orders indexes reflected a slowdown in both supply and demand in the manufacturing sector. New export orders fell to 48.7 from 50.0 in September, moving from the threshold into contraction, according to the bureau. Reuters noted that overseas Christmas orders brought forward into September later declined, while consumer spending momentum also eased after rising during the National Day holiday in the first week of October.
Weakness extended to broader activity, with the non-manufacturing activity index at 49.7 in October, down 0.5 point from the previous month, and the composite output index falling to 49.7 after a one-point decline. The non-manufacturing activity index had recorded 50.2 in September, up 1.2 points from August, before slipping back below the expansion threshold in October. Services and construction, however, took different paths: the services activity index held at 50.0, while the construction index fell to 48.0, down 2.3 points. The bureau said a decline in financial activity was the main reason the services index fell. The non-manufacturing new orders index also stood at 44.4, down 2.1 points from September, while the construction new orders index was 40.0.
The bureau’s data showed divergence across company sizes and industrial sectors. The index for large companies remained at 50.2, while medium-sized companies recorded 48.4 and small companies 47.5, leaving the latter two groups below the expansion threshold. By contrast, the high-tech manufacturing index stood at 51.3 and the equipment manufacturing index at 50.6, compared with 48.8 for consumer goods and 47.3 for energy-intensive industries. Price indexes also diverged: the raw material purchase price index was 56.8, down 4.0 points from September, while the producer price index was 51.7, down 2.3 points. The bureau attributed the declines in both indexes to lower prices for some commodities, including non-ferrous metals.
Zhang Liqun, an analyst at the China Federation of Logistics and Purchasing, said, "Insufficient demand is adding to downward pressure on the economy." Economists said the export strength that supported activity through much of the year may not be enough to offset the prolonged stagnation in consumer spending. On services, the bureau said the activity expectations index stood at 55.2 and remained at a high level, with most companies in the sector retaining confidence in market prospects. The chief economist at Pinpoint Asset Management said China would need greater policy support to stimulate domestic demand if external demand weakens in 2027. The National Bureau of Statistics and the China Federation of Logistics and Purchasing published the October index data on October 31.