China's Factory Activity Shrinks Again in October as the Official PMI Falls to 49.3 and Misses Forecasts

China's factory sector slipped back into contraction in October, according to official survey data released on Saturday, October 31, 2026. The manufacturing purchasing managers' index (PMI) compiled by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing fell to 49.3 from 50.1 in September, a drop of 0.8 point.

The reading was below the 50.0 forecast in a Reuters poll of economists and marked the third contraction in four months, Reuters reported. A PMI above 50 indicates expansion from the previous month, while a reading below 50 indicates contraction. October's figure was the weakest since July, when the index stood at 49.2, according to the NBS data table.

Demand and output both weakened

Four of the five sub-indexes that make up the headline manufacturing PMI were below 50 in October, the NBS said. The production index fell 1.9 points to 49.8, slipping into contraction after reading 51.7 in September. The new orders index dropped 1.1 points to 49.4, which the statistics bureau said showed weaker market demand.

The employment index was unchanged at 48.4, and the raw materials inventory index edged up 0.2 point to 48.4. The supplier delivery times index rose 0.1 point to 50.2, the only component above the 50 line.

Other manufacturing gauges published by the NBS also fell from September levels:

• New export orders: 48.7, down from 50.0
• Imports: 47.0, down from 49.2
• Purchase quantity: 48.9, down from 51.0
• Main raw material purchase prices: 56.8, down from 60.8
• Ex-factory prices: 51.7, down from 54.0
• Backlog of orders: 44.1, down from 46.0
• Business expectations: 53.4, down from 53.8

By company size, the PMI for large enterprises fell 0.4 point to 50.2, remaining above the threshold. The gauges for medium-sized and small enterprises dropped 1.3 points and 1.4 points to 48.4 and 47.5, respectively, the China News Service reported, citing the bureau's release.

Services and construction also cooled

The official non-manufacturing business activity index, which covers services and construction, fell 0.5 point to 49.7 in October. Construction activity dropped 2.3 points to 48.0, while the services index slipped 0.2 point to exactly 50.0, the NBS said.

Within services, business activity indexes for railway transport, water transport, postal services, and internet software and information technology services were above 55.0. Indexes for capital market services, insurance and real estate were below 50. Non-manufacturing new orders fell 2.1 points to 44.4, with the construction new orders index down 5.7 points to 40.0.

The composite PMI output index, which combines manufacturing and non-manufacturing output, fell 1.0 point to 49.7.

Seasonal and holiday effects

According to Reuters, factory activity weakened as overseas Christmas-related orders, which had been front-loaded in September, cooled in October. Consumer spending that rose during China's National Day holiday in the first week of October also faded afterward. Reuters noted that the first month of a quarter is typically the weakest for the survey.

"Insufficient demand is increasing downward pressure on the economy," Zhang Liqun, an analyst with the China Federation of Logistics and Purchasing, said, according to Reuters.

Some industries held up. Production and new orders sub-indexes for railway, shipbuilding, aerospace equipment, and computer, communications and electronics manufacturing were all at or above 53.0, according to the survey as reported by Reuters.

Economists' views and growth context

Economists quoted by Reuters pointed to policy options. Zhang Zhiwei, chief economist at Pinpoint Asset Management, said that if external demand weakens in 2027, "China will need more significant policy support to boost domestic demand." Lu Zhe, chief economist at Soochow Securities, called for expanding subsidies for mortgage interest payments "to shore up household confidence and anchor sentiment."

Reuters reported that China's trade surplus is on track to exceed last year's $1.2 trillion, and that the economy is still expected to meet the government's 4.5% to 5.0% annual growth target after third-quarter growth picked up to 4.5% from 4.3% in the April-June period.

The official PMI is based on monthly surveys of purchasing managers at 3,200 manufacturing companies across 31 industry groups and 4,300 non-manufacturing companies across 43 industry groups, according to the NBS methodology notes. MacroHerald also reported the 49.3 reading against a market forecast of 50.