Contraction in Chinese Industrial Activity Returns in October
Official data showed a decline in factory activity in China during October, with the Purchasing Managers' Index recording 49.3 points, missing economists' expectations, despite growth in advanced technology sectors and weak consumer demand.
Translated by Qiyas from الراي — Original source
China’s factory activity retreated into contraction territory again in October, official data showed on Saturday, despite continued growth in advanced technology sectors amid a weak consumer goods market.
The Purchasing Managers’ Index (PMI), which measures industrial activity, stood at 49.3 points this month, below the 50-point threshold that separates expansion from contraction.
Factors behind the decline included a week-long national holiday at the beginning of October, as well as a “complex and volatile international environment,” according to He Lihui, an expert at the National Bureau of Statistics.
The figure released by the National Bureau of Statistics came in below economists’ forecasts in a Bloomberg survey, which had projected 49.9 points, and was lower than the levels recorded in September and August, which stood at 50.1 and 49.8 points, respectively.
However, the index was higher than the 49.2 points recorded in July.
He added that despite “positive momentum” in the advanced technology sector, fueled by the artificial intelligence boom, the PMI for the consumer goods sector fell by 1.9 percentage points in October compared to September, indicating that “market activity showed relative weakness.”
Beijing aims to achieve annual growth of between 4.5% and 5% this year, its lowest target in decades, as weak domestic demand is curbing the momentum of Chinese exports, according to Cheui Chang, chief economist at Point Capital Asset Management.
He added, “If external demand weakens in 2027, China will need much stronger support through economic policies to boost domestic demand.”
The data also showed that the PMI for non-manufacturing sectors, which measures activity in areas such as services and construction, stood at 49.7 points in October.
This figure was below Bloomberg’s forecast of 50.0 points and represented a decline from the 50.2 points recorded in September.
He Lihui noted that the decline was “affected by factors such as a slowdown in business activity in certain service sectors,” particularly the financial sector, but did not provide further details.
