China factory activity contracts for third time in four months, PMI drops to 49.3
China's manufacturing PMI fell to 49.3 in October from 50.1 in September, marking the third contraction in four months. The decline was driven by weak export demand and fading consumer spending after the National Day holiday, with analysts warning of insufficient demand.
China's factory activity unexpectedly contracted in October, the third decline in four months, according to official data released on 31 Oct 2026. The manufacturing purchasing managers' index (PMI) fell to 49.3 from 50.1 in September, missing the 50.0 forecast from a Reuters poll, the National Bureau of Statistics reported.
The contraction was driven by cooling overseas Christmas-related orders, which had been front-loaded in September, and a return to stagnant consumer spending after the National Day holiday in early October. Sub-indexes for new orders overall and new export orders both remained in contraction territory, while production and purchasing activity slipped from expansion into contraction.
"Insufficient demand is increasing downward pressure on the economy," said Zhang Liqun, an analyst with the China Federation of Logistics & Purchasing, adding that policymakers should take the problem seriously and step up measures as soon as possible.
The non-manufacturing PMI, covering services and construction, also dropped to 49.7 from 50.2 in September. A reading above 50 signals expansion, while below 50 indicates contraction.
Some manufacturing sectors fared better. Production and new orders sub-indexes for railway, shipbuilding, aerospace equipment, and computer, communications and electronics manufacturing were all at or above 53.0. AI-related firms performed strongly, with Zhongji Innolight, a maker of high-speed optical modules for AI data centres, reporting a near tripling in third-quarter net profit.
However, lacklustre domestic demand and rising costs weighed on traditional manufacturers and property-linked firms. Custom furniture maker Oppein Home saw net profit plunge 80 per cent in the quarter. Despite the manufacturing weakness, China's economy is expected to meet its 4.5-5.0 per cent annual growth target after third-quarter growth rebounded to 4.5 per cent from 4.3 per cent in April-June.
