China’s Manufacturing PMI Shows Steeper-Than-Expected Downturn
China’s manufacturing purchasing managers’ index (PMI) experienced a broad decline in October, indicating a challenging start to the fourth quarter. While the non-manufacturing PMI returned to expansionary territory, manufacturing activity showed notable weakness.
Manufacturing PMI Decline and Subcategory Performance
The official manufacturing PMI dropped to 49.0, down from 49.8, marking a six-month low and matching the lowest level seen in April this year. This result fell short of expectations, which anticipated a smaller decrease to 49.6. The slowdown was widespread across key subcategories:
- Production contracted for the first time in six months, falling to 49.7—the lowest point since May 2023.
- New orders declined to 48.8 after two months of growth, reaching the lowest level since August 2024.
- New export orders fell to a six-month low of 45.9, contributing significantly to the overall decline.
- Employment remained in contraction for the 32nd consecutive month, but the downturn eased slightly with a minor drop of 0.2 points to 48.3.
Impact on Enterprise Sizes and Market Outlook
Large, medium, and small-sized enterprises all moved into contractionary territory for the first time since April. However, larger enterprises continued to outperform smaller ones throughout the month. Given that economic growth has largely been fueled by external demand and industrial activity, this steep PMI downturn could spark concerns about the outlook.
China's official manufacturing purchasing managers’ index slowed to 49.0, down from 49.8. It came in below expectations for a smaller moderation to 49.6.
"The downturn in the PMI marks a poor start to the fourth quarter and may cause some concern, given that growth has been supported by external demand and industrial activity."
Author’s summary: China’s manufacturing sector faces a sharper slowdown than expected, with all major enterprise sizes now contracting, raising doubts about sustaining growth driven by exports and industrial activity.