China’s Official Manufacturing PMI Falls to 49.3 in October as Orders Contract
Key Facts
China’s official manufacturing Purchasing Managers’ Index fell to 49.3 points in October, down 0.8 percentage points from September, according to the National Bureau of Statistics. The reading was below the Reuters poll forecast of 50.0 points, after the index registered 50.1 in the previous month. A reading below the 50-point threshold indicates contraction in activity in the official survey. By contrast, the private RatingDog index stood at 52.0 points in October, according to a reading released on November 2. The private survey remained in expansion territory for the 11th consecutive month, despite edging down from September’s reading. The divergence reflects differences in the surveys’ coverage and composition, alongside weak demand that weighed on official activity.
Performance varied within the official survey by company size: the index for large companies remained at 50.2 points, above the expansion threshold. Medium-sized companies registered 48.4 points and small companies 47.5 points, both in contraction territory. The official survey classifies companies by size, not ownership, so these figures do not support describing the result as a divide between state-owned and private companies. The figures highlight the breadth of weakness beyond the large-company category, with that category alone remaining above the 50-point threshold. The National Bureau of Statistics said some demand was brought forward ahead of the National Day holiday, while the indicators were also affected by a more complex international environment. The bureau cited these among the factors associated with the index’s decline in October.
New orders, including export orders, fell in the official survey: the new export orders index declined to 48.7 points in October from 50.0 in September. That put the export component below the expansion threshold after it had been at that level the previous month. An analyst at the China Federation of Logistics and Purchasing said, "Insufficient demand is increasing downward pressure on the economy." Reuters also reported that overseas Christmas orders placed through September eased in October, alongside fading momentum in spending linked to the National Day holiday. These factors are consistent with the decline in orders in the official survey, with the pressures not limited to a single channel.
In the private survey, continued expansion did not prevent signs of competitive pressure and a slowdown in some demand components. Export order growth slowed to a three-month low, according to a Reuters report, while export prices fell for the first time since November 2025. The report pointed to rising input costs and intensifying competition, with business confidence remaining positive but falling to a nine-month low. Reuters said fierce competition had led companies to cut selling prices. Thus, the private index grew at 52.0 even as signs emerged of price pressures and weaker momentum in some orders. The private survey reading does not negate the contraction in the official index, as each survey measures a different sample of activity.
The readings come as China’s economic growth rebounded to 4.5% in the third quarter, from 4.3% in the second quarter, Reuters reported. China’s annual growth target for 2026 was between 4.5% and 5.0%, and the agency said the country was expected to meet it without additional stimulus measures. In foreign trade, the Associated Press reported that China’s trade surplus in 2026 could exceed the previous year’s record of $1.2 trillion. This backdrop places the decline in factory indicators alongside an economic rebound in the third quarter and a trade surplus projected to keep rising. But October data showed weak orders in the official survey, while the private survey remained in expansion territory.
Attention is turning to Chinese trade data due on November 10, with an October surplus forecast at $135 billion, according to an economic calendar. An economist at Pinpoint Asset Management said that if external demand weakens in 2027, China would need "greater policy support to boost domestic demand." Another economist called for expanding mortgage interest subsidies "to support household confidence and anchor sentiment." These calls put domestic demand at the center of the debate over how to address a potential weakening in exports. The upcoming trade balance data will provide a new figure on October trade performance, following the mixed factory readings.