China’s manufacturing sector returned to contraction in October, official data revealed Saturday, amid weakening consumer demand despite continued expansion in high-tech industries. The National Bureau of Statistics (NBS) reported that the manufacturing purchasing managers’ index (PMI) declined to 49.3 last month, falling below the 50-point threshold that distinguishes between expansion and contraction.

The October reading fell short of economists’ expectations, which had forecast a PMI of 49.9, and was lower than September’s 50.1 and August’s 49.8. However, it remained slightly above the 49.2 recorded in July. NBS statistician Huo Lihui attributed the decline partly to a one-week national holiday early in the month as well as a “complex and volatile international environment.” Rising international crude oil prices have also increased costs for commodities such as coal, rubber, and plastic products, contributing to the slowdown.

While the broader manufacturing sector contracted, the high-tech industry continued its positive momentum, driven by a surge in artificial intelligence development. Nevertheless, the consumer goods subsector showed signs of weakening, with its PMI falling by 1.9 percentage points compared to the previous month, an indication that market activity in this area has softened.

Beijing has set a modest annual economic growth target of 4.5 to 5.0 percent for 2026, its lowest in decades, reflecting challenges posed by sluggish domestic consumption and reduced export strength. Zhiwei Zhang, chief economist at Pinpoint Asset Management, noted that robust export performance alone would be insufficient to sustain economic momentum. He emphasized the need for more substantial policy measures to stimulate domestic demand, especially if external demand weakens in 2027.

In addition to manufacturing, China’s non-manufacturing PMI, which covers sectors such as services and construction, registered 49.7 in October, also signaling contraction. The combination of these trends highlights the ongoing challenges facing China’s economy amid shifting global conditions and internal market dynamics.