China Factory PMI Slips to 49.3 in October, Back in Contraction as New Orders Weaken

China’s manufacturing sector slipped back into contraction in October, with the official purchasing managers’ index falling to 49.3 from 50.1 in September, the National Bureau of Statistics (NBS) said on Saturday, Global Times reported. The reading fell below the 50-point line that separates expansion from contraction and, according to Agence France-Presse, missed a Bloomberg forecast of 49.9.

Broader activity also cooled. The non-manufacturing PMI dropped to 49.7 from 50.2, while the composite PMI, which combines both sectors, fell to 49.7 from 50.7, according to figures carried by China Daily and Global Times. China Daily said the services sub-index stood at the 50-point threshold.

Factory demand weakens

The production sub-index fell 1.9 points to 49.8, and the new orders sub-index declined 1.1 points to 49.4, Global Times reported. Raw materials inventory and employment readings were also below 50, while suppliers’ delivery times stayed above it.

Smaller firms bore the brunt. The PMI for large enterprises eased 0.4 points to 50.2, while medium-sized companies dropped 1.3 points to 48.4 and small firms fell 1.4 points to 47.5.

NBS statistician Huo Lihui attributed the decline to some demand being pulled forward ahead of the National Day holiday earlier in October and to a complex international environment. AFP reported that Huo also cited a 1.9-point fall in the consumer goods PMI.

New industries hold up

Some segments continued to grow. The high-tech manufacturing PMI came in at 51.3 and the equipment manufacturing PMI at 50.6. A gauge of manufacturers’ expectations for production and business operations stood at 53.4, which China Daily said showed firms remained relatively upbeat. In services, the business expectations index was 55.2, with railway and water transport, postal services, internet software and IT services all above 55.

Li Chang’an, a professor at the University of International Business and Economics, told Global Times that while overall sentiment had softened, “new industries continue to provide important support”. He pointed to electric vehicles, batteries, solar cells and integrated circuits as sectors supporting manufacturing stability.

What’s next

Wen Bin, chief economist at China Minsheng Bank, described the data as a mixed picture and said exports could get some seasonal support in the fourth quarter, when shipments typically rise ahead of Western holidays such as Christmas. Economists cited by Global Times linked October’s dip to a pullback in overseas orders after a temporary surge in September, softer consumer demand after the holiday and a seasonal slowdown in basic raw materials, describing it as a temporary adjustment.

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