China manufacturing slump deepens to 6-month low in October, as PMI misses estimates

China’s manufacturing activity contracted more than expected in October, falling to a six-month low, an official survey showed on Friday; Trade tensions with Washington flared again during the month.

Data from the Office for National Statistics showed the official manufacturing purchasing managers’ index came in at 49.0, missing economists’ expectations of 49.6 in a Reuters poll. A reading above the 50 reference point indicates growth, while a reading below indicates contraction.

The latest data has reversed the recovery of 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 continued to contract since April, when US President Donald Trump’s tariff campaign weighed on Chinese factories as well as global demand.

The Chinese economy grew by 4.8% in the third quarter, marking the slowest growth in a year. According to Wind Information data for 1992, fixed asset investment unexpectedly contracted by 0.5% in the first nine months of the year, adding to the constraint on the economy; This was the first such decline since 2020 during the pandemic.

Major industrial firms rose 21.6 percent in October from a year earlier, the biggest increase in nearly two years, as declines in factory gate prices eased amid Beijing’s campaign to rein in a brutal price war and overcapacity.

Domestic demand remained stagnant as the prolonged housing slump and soft labor market conditions eroded households’ spending power.

China and the United States reached a trade truce on Thursday after months of rising tensions, easing what had threatened to push the world’s two largest economies into a full-blown trade war.

Trump said the United States would immediately cut its 20 percent fentanyl-related tariffs on Chinese goods by half, and in return Beijing would continue “massive” purchases of American soybeans and other farm products. China also agreed to pause comprehensive rare earth controls for a year while taking steps to stem the flow of precursor chemicals used to produce fentanyl. Both sides agreed to suspend fees for ships docking at each other’s ports for one year.

But analysts warned that the meeting fell short of a comprehensive agreement addressing key issues of the US-China rivalry and other contentious issues, including Taiwan, making it vulnerable to a new escalation in delicate detente.