China’s manufacturing sector contracted at a sharper-than-expected pace in October, dropping to its lowest point in six months amid renewed friction with the United States, according to official data released Friday.
The National Bureau of Statistics reported the manufacturing Purchasing Managers’ Index at 49.0, falling short of the 49.6 forecast in a Reuters poll and signaling a steeper decline after a modest recovery in previous months. A reading below 50 indicates contraction, underlining waning momentum in the sector.
October’s data reversed the uptrend seen through September, when the PMI stood at a six-month high of 49.8, and followed readings of 49.4 in August and 49.3 in July. Sub-indexes tracking production, new orders, inventories, and employment all deteriorated further into negative territory, underscoring a deepening slowdown and persisting weakness in manufacturing demand.
Official figures also showed some resilience outside manufacturing: the non-manufacturing PMI, covering construction and services, edged slightly higher to 50.1, buoyed by robust performance in transportation, accommodation, culture, and sports sectors, partly spurred by the eight-day Golden Week holiday early in the month.
The combined manufacturing and non-manufacturing PMI slipped to the 50 mark—its weakest level since December 2022, Wind Information data revealed.
China’s broader economic growth continued to slow, with third quarter GDP expanding 4.8%, the most sluggish year-on-year pace in a year. Adding to the challenges, fixed-asset investment unexpectedly dropped by 0.5% in the first nine months of 2025—the first fall since 2020, according to Wind Information data going back to 1992.
Despite downward pressure elsewhere, profits at large industrial companies saw a strong rebound. Factory earnings jumped 21.6% in October from a year prior, buoyed in part by Beijing’s efforts to stabilize output prices and moderate overcapacity.
Still, domestic demand remained weak. Consumer spending was held back by a prolonged decline in property markets and subdued labor conditions.
A trade truce struck Thursday between China and the U.S. halted months of escalating tensions, with both sides agreeing to measures that ease tariffs and restrictions.
President Trump announced an immediate halving of 20% tariffs on Chinese goods tied to fentanyl, while China pledged to resume sizeable U.S. agricultural imports and temporarily suspend restrictions on rare-earth exports for a year, along with curbs on chemicals used for fentanyl production. Tariffs for ships docking at each other’s ports were also suspended for a year.
However, analysts noted the agreement fell short of resolving core areas of dispute, such as Taiwan and other strategic concerns, leaving the deal fragile and vulnerable to future flare-ups.
