BEIJING — China’s factory activity slowed in October, falling short of market expectations as new export orders dropped sharply amid renewed trade tensions with the United States, according to a private survey released Monday.
The RatingDog China General Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, eased to 50.6 in October from 51.2 in September, missing analysts’ expectations of 50.9 in a Reuters poll.
Despite remaining above the 50 point threshold that separates growth from contraction, the reading highlighted a weakening momentum in the world’s second largest economy.
China’s industrial sector has been struggling to sustain recovery in recent months as sluggish global demand, trade frictions, and domestic market uncertainty weigh on manufacturers.
October’s downturn followed a six month high in September and came as Beijing and Washington entered another round of tariff disputes before agreeing to a temporary trade truce late in the month.
The survey found that new export orders fell at the fastest pace since May, with firms citing “rising trade uncertainty” and delayed shipments due to shifting tariffs.
Both output and new business grew at slower rates, while business confidence slipped to its lowest level in half a year. “When assessing the one year outlook for production, firms were the least upbeat in six months,” S&P Global said in the report.
Economists said the weaker manufacturing reading reflects both external pressure from the US China trade conflict and internal structural challenges within China’s industrial economy.
“The decline in export orders suggests that global demand remains fragile, particularly in electronics and machinery,” said Dongming Xie, managing director and head of Asia macro research at OCBC Bank.
“But the trade truce and reduced tariffs may help stabilize sentiment going forward.” Xie added that the PMI is likely to rebound modestly in the coming months if export orders recover and domestic stimulus measures continue.
Chen Minghao, an economist at the Chinese Academy of Social Sciences, said the softness in October data “mirrors a cautious global environment” and a shift in manufacturing priorities.
“China’s factories are adjusting to a new trade landscape that emphasizes high value exports and reduced reliance on low cost goods,” he said.
The private PMI reading, based on a survey of 650 manufacturers, painted a relatively better picture than the official government PMI, which dropped to 49.0 in October its lowest in six months.
While the official survey focuses on larger state owned enterprises, the private index reflects conditions among smaller, export oriented firms, which are often more responsive to external shocks.
The report also highlighted that employment at factories expanded for the first time since March, rising to its highest level since August 2023.
Analysts said this improvement was likely driven by seasonal hiring and restocking ahead of year end demand. “Manufacturers have cautiously resumed hiring, indicating that businesses are expecting stabilization rather than a prolonged downturn,” said Liang Xu, senior market strategist at Hang Seng Bank in Hong Kong.
In China’s eastern manufacturing hub of Suzhou, factory managers said they were seeing slower export demand but remained hopeful about the coming months.
“Our orders from Europe dropped by nearly 20 percent in October,” said Liu Yifan, who runs a mid sized electronics assembly plant. “But we’re starting to receive new inquiries from the US since the tariff rollback announcement.”
At a textile factory in Guangdong province, Wang Xiaoqin, a production supervisor, said the slowdown was noticeable but not alarming.
“We’re operating at about 85 percent capacity,” Wang said. “Raw material prices have stabilized, and our clients are waiting for clarity on the trade rules.”
Some business owners welcomed the easing of US restrictions under the new trade agreement reached last week.
The suspension of the 50 percent ownership rule under export controls is a relief, said Zhao Wei, who exports machine parts to the US We can plan our operations more confidently now.
The US China trade truce, announced after a meeting between President Donald Trump and President Xi Jinping in South Korea, brought temporary relief to global markets.
Under the agreement, Washington agreed to cut tariffs on Chinese goods linked to fentanyl related exports by half to 10 percent, reducing the total rate to about 47 percent.
In return, Beijing paused its export restrictions on rare earth metals, a critical input for electronics and defense industries. The US also agreed to suspend its Section 301 investigation into China’s shipbuilding and logistics sectors.
Economists believe these measures could help improve China’s manufacturing outlook in the short term, though challenges remain.
“Trade peace is fragile,” said Anna Lu, a senior China economist at BNP Paribas. “While the truce reduces immediate risks, both sides remain cautious. Business confidence will take time to recover, and any geopolitical flare up could derail progress.”
China’s manufacturing slowdown in October underscores the delicate balance the economy faces between domestic stabilization efforts and external trade headwinds.
While the RatingDog PMI remains in expansionary territory, the decline in export orders and softening business confidence suggest that sustained growth will depend on steady policy support and a durable easing of trade tensions.
As factories cautiously expand hiring and adjust to a shifting global trade environment, the coming months will test whether China’s manufacturing sector can regain its footing amid fragile global demand and geopolitical uncertainty.