China Composite PMI Falls Back into Contraction

China’s NBS Composite PMI Output Index fell to 49.7 in October 2026 from September’s nine-month high of 50.7, marking the fifth contraction in overall business activity so far this year. The decline reflected weaker manufacturing output and a renewed contraction in the services sector following a brief expansion in September. While high-tech manufacturing remained resilient, supported by AI-related demand, broader business activity softened amid subdued domestic demand and seasonal disruptions from the Golden Week holiday. NBS statistician Huo Lihui attributed the overall slowdown partly to the impact of the holiday.

China’s NBS Composite PMI Output Index rose to 50.7 in September 2026 from 49.5 in the previous month, marking the highest reading since December 2025 and the first expansion in overall business activity since June. The improvement reflected faster growth in manufacturing output and a return to expansion in the service sector after two months of contraction. Strong global demand for AI hardware supported sentiment, while expectations of further policy support from Beijing and a recovery from weather-related disruptions in August also boosted activity. However, persistent headwinds remained, including weak domestic demand, higher energy costs that squeezed factory margins, and uneven momentum across the broader economy. NBS statistician Huo Lihui said the September expansion was driven by brisk activity in technology-related and consumer industries.

China’s NBS Composite PMI Output Index edged up to 49.5 in August 2026 from July’s 3-1/2-year low of 49.3. However, the latest reading marked the second straight month of contraction in overall business activity, as weak services activity continued to weigh on growth despite a return to expansion in manufacturing output. Soft domestic demand and persistent weakness in the property sector remained key headwinds, while trade tensions added uncertainty to the external outlook. NBS statistician Huo Lihui said the August reading reflected the impact of extreme weather in some parts of the country, while noting that overall business activity recovered slightly from July.