London, UK – September 30, 2025, In September 2025, China’s manufacturing activity recorded its sixth straight month of contraction, underscoring persistent economic headwinds. According to official data, the factory Purchasing Managers’ Index (PMI) ticked up slightly to 49.8 from 49.4 in August—yet still remained below the 50-point threshold that separates growth from shrinkage.
While the official numbers reflect weakness in larger, domestically oriented firms, a private-sector PMI (which includes more export-facing companies) painted a more hopeful picture, rising to 51.2 in September from 50.5 the prior month.
Key Trends & Pressures
- Domestic Demand Weakness: The subdued performance is partly driven by weak consumer spending, a stagnant property sector, and sluggish local investment.
- Margin Compression: Factories are pushing more volume, but often at tighter margins. In the words of one market observer: “Factories are moving more goods, but they’re being forced to do it at thinner margins.”
- Trade Tensions Bite: Continued tariff pressures and uncertainties in U.S.–China relations have added external strain on exporters and supply chains.
- Mixed Signals: The divergence between the official and private PMIs suggests that export-oriented firms are showing relative resilience, while the domestic market remains challenged.
What Comes Next
Businesses and analysts are watching closely for what the Chinese government may do next. Some anticipate targeted stimulus—such as consumer loan subsidies, selective rate cuts, or easing of reserve requirements—to shore up demand.
Meanwhile, with broader uncertainty over trade deal outcomes and global demand, the manufacturing sector may continue under pressure until clearer policy signals emerge.
