Official data: China’s manufacturing contraction eased in September as production strengthened

China’s manufacturing downturn eased in September, with official data showing the strongest factory momentum in six months despite activity remaining in contractionary territory.

The official manufacturing purchasing managers’ index (PMI), released by the National Bureau of Statistics (NBS), rose to 49.8 in September from 49.4 in August, marking the sixth straight month below the 50-point threshold that separates expansion from contraction. The reading, which exceeded forecasts for a smaller rebound, reflects signs of stabilisation in parts of the industrial economy.

The breakdown offered a mixed picture. Output jumped to 51.9, the highest since March, while new orders inched up to 49.7 from 49.5. New export orders also improved, climbing to a six-month high of 47.8. 

Less encouraging was the decline in ex-factory prices, which fell to 48.2—signalling a 16th consecutive month of deflation in factory gate prices despite Beijing’s “anti-involution” efforts to curb cut-throat competition.

The non-manufacturing sector offered little relief. The services and construction PMI weakened to 50.0 from 50.3 in August, its lowest level this year, raising concerns that momentum in the broader economy is stalling. 

The figures highlight the uneven nature of China’s recovery. While external demand has remained more resilient than expected—supporting year-to-date growth—domestic consumption and pricing power continue to lag. Analysts expect Beijing to roll out further policy support before year-end, with forecasts pointing to one more 10bp rate cut and a 50bp reduction in the reserve requirement ratio to bolster confidence and stabilise demand.

Written: Aiman Haikal