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China manufacturing slump deepens to 6-month low in October, as PMI misses estimates
Chinese-made automobiles and construction machinery are assembled and shipped for export at Yantai Port in Yantai City, Shandong Province, China, on October 21, 2025.
Costfoto | Nurphoto | Getty Images
China’s manufacturing activity in October contracted more than expected, shrinking to its lowest since April, an official survey showed on Friday, as trade tensions with Washington reignited during the month.
The official manufacturing purchasing managers’ index came in at 49.0, data from the National Bureau of Statistics showed, missing economists’ expectations for 49.6 in a Reuters poll. A reading above the 50 benchmark indicates growth while one below that suggests contraction.
The latest reading reversed the recovery in recent months, after the PMI rose to a six-month high of 49.8 in September, compared to 49.4 in August and 49.3 in July.
The country’s manufacturing activity has remained in contraction since April, when U.S. President Donald Trump’s tariff campaign pressured Chinese factories as well as global demand.
China’s economy expanded 4.8% in the third quarter, marking the slowest growth in a year. Adding to the constraint on the economy, fixed-asset investment unexpectedly contracted 0.5% in the first nine months of the year — the first such decline since 2020 during the pandemic — according to data going back to 1992 from Wind Information.
Large industrial firms saw their profits surge the most in nearly two years, rising 21.6% in October from a year earlier as the declines in factory-gate prices eased amid Beijing’s campaign to rein in a bruising price war and excess capacity.
Domestic demand has remained sluggish, with a protracted property slump and soft labor-market conditions eroding households’ spending power.
China and the U.S. reached a trade truce on Thursday after months of rising tensions, de-escalating the situation that had threatened to push the world’s two largest economies into a full-blown trade war.
Trump said the U.S. would immediately cut the 20% fentanyl-linked tariffs on Chinese goods by half, and in turn, Beijing would resume “massive” purchases of American soybeans and other farm products. China also agreed to pause its sweeping rare-earth controls for a year while taking steps to stem the flow of precursor chemicals used in fentanyl production. Both sides agreed to suspend fees for one year on ships that dock at each other’s ports.
But analysts cautioned that the meeting fell short of a comprehensive pact that addresses issues core to the U.S.-China rivalry and other contentious issues, including Taiwan, making the deal vulnerable to another escalation in the delicate detente.
