China’s manufacturing sector showed slight improvement in September, but the broader economy faces ongoing challenges, marking a sixth consecutive month of contraction—the longest slump since 2019, Bloomberg reports.
The National Bureau of Statistics (NBS) said Tuesday that the official manufacturing purchasing managers’ index (PMI) edged up to 49.8 from 49.4 in August, slightly above the Bloomberg-surveyed median estimate of 49.6. Readings below 50 signal contraction. Meanwhile, the non-manufacturing index, which covers construction and services, fell to 50 from 50.3, indicating persistent weakness in the broader economy.
Hurting factory activity are subdued domestic demand and uncertainty over US tariffs, which continue to pose risks for exporters. Official data showed modest increases in production and new orders, but business activity in travel-related sectors—including catering, culture, sports, and entertainment—contracted after the summer holiday period, according to Huo Lihui, chief statistician at the NBS.
Private surveys were more optimistic. The RatingDog China General Manufacturing PMI rose unexpectedly to 51.2 in September from 50.5 in August, with new export orders returning to growth for the first time since March 2025. The RatingDog services PMI also improved to 52.9 from 53, reflecting stronger performance among smaller, export-oriented firms.
A key question now is whether the government will step in to support growth. On Monday, China announced it will inject 500 billion yuan ($70 billion) in capital under a “new financing policy tool” to spur investment. Analysts say such measures are particularly important as the ruling Communist Party prepares to review development plans for the next five years in October.
The real estate sector remains a constraint. Home sales continued to decline in August, despite additional stimulus in China’s two largest cities. “The property market shows no sign of recovery,” said Raymond Yeung, chief economist for Greater China at ANZ Banking Group Ltd., adding that the slowdown appears structural rather than cyclical.
Bloomberg Economics analysts Chang Shu and Eric Zhu noted: “China’s September PMIs confirmed our expectations — the economy continued to decelerate, though less sharply than in August. Better weather and companies resuming output after pausing for a military parade eased the retreat in manufacturing and construction, while the service sector sagged as summer travel ended.”
US-China relations remain a factor. While tensions appear to have stabilized after a recent call between the two leaders, a 90-day tariff truce expires in early November. President Trump has said he will meet Chinese President Xi Jinping on the sidelines of the upcoming Asia-Pacific Economic Cooperation summit in South Korea.
Meanwhile, the government’s campaign to reduce overcapacity and excessive competition among companies is adding pressure on sectors such as steel. Cost pressures also increased for manufacturers in September, with many lowering selling prices amid “intense competition,” according to the RatingDog survey.
