China Factory Activity Slumps for Longest Stretch on Record
(Bloomberg) -- China’s factory activity improved but remained in contraction in November, extending its streak of declines to a record as the country’s economic slowdown deepens.
The official manufacturing purchasing managers’ index was 49.2, remaining below the 50 mark that separates growth and contraction for an eighth month. The median estimate of economists surveyed by Bloomberg was 49.4.
The non-manufacturing measure of activity in construction and services reached 49.5, after inching up to 50.1 in October, the National Bureau of Statistics said Sunday. It was the first contraction for the index in nearly three years, driven by weakness in the real estate and residential services sectors.
The readings offer an early glimpse of how the world’s second-biggest economy fared in November, after months of global trade turbulence and an unprecedented decline in investment. So far this quarter, industrial production had its smallest gain since the start of the year, while exports unexpectedly contracted, as global demand failed to offset the slump in shipments to the US.
But tensions with the US have eased after a temporary truce last month following a meeting in South Korea between Presidents Donald Trump and Xi Jinping. Key details of the deal, including questions over Chinese shipments of rare earths, are still being negotiated, underscoring the fragility of the agreement.
A diplomatic spat with Japan in recent weeks has added to trade uncertainty, however, as China contemplates economic countermeasures.
Beyond geopolitical risks, weak domestic demand is still casting a pall over the outlook for Chinese factories. Growth in retail sales slowed for the fifth straight month in October, the longest such streak since the country shuttered shops because of the Covid pandemic more than four years ago.
The recent downswing in the economy doesn’t mean that additional stimulus measures are on the table. Chinese policymakers are in no rush to act now that their annual growth target of around 5% for this year looks to be within reach.
China already injected additional stimulus worth 1 trillion yuan ($141 billion) since late September, including unused bond quota for provinces to expand investment and repay arrears owed to companies, as well as new funding for policy banks to spur investment.
Looking at the next five years, Beijing has made clear it plans to keep tech and manufacturing as the top priorities even as it pledged to “significantly” boost the share of consumption in its economy. Net exports contributed nearly a third of China’s growth this year.
China’s economic growth decelerated last quarter to the slowest pace in a year. Analysts see a further slowdown, forecasting the weakest this quarter since the final three months of 2022, when the nation was nearing the end of its Covid Zero lockdowns.
©2025 Bloomberg L.P.
