China factory activity returned to contraction in October. The manufacturing purchasing managers’ index (PMI) came in at 49.3, below the 50 level that separates expansion from contraction.
The National Bureau of Statistics (NBS) reading missed a Bloomberg survey forecast of 49.9. For Malaysian investors, it is a read-through on demand for the goods and commodities that Bursa Malaysia companies sell into China.
Why Did China Factory Activity Fall to 49.3 in October?
A week-long national holiday at the start of the month weighed on manufacturing, NBS statistician Huo Lihui said. She also blamed a ‘complex and volatile international environment’.
The PMI was below September’s 50.1 and August’s 49.8. It did beat July’s 49.2, so the October reading is a retreat from the last two months but not a collapse.
How Are Higher Crude Oil Prices Hitting Input Costs?
International crude oil prices kept climbing, lifting the prices of coal, rubber and plastic products, Huo said.
The consumer goods PMI fell 1.9 percentage points from September, showing that ‘market activity has somewhat weakened’. High-tech activity, fuelled by the artificial intelligence boom, offered a positive counterweight.
Is China’s Services Sector Slowing Too?
The non-manufacturing PMI came in at 49.7 in October. That was below a Bloomberg forecast of 50.0 and down from 50.2 in September.
Huo attributed the drop to a decline in business prosperity in certain service sectors, particularly finance, but did not elaborate. Construction activity also slowed compared with September.
Can China Reach Its 4.5% to 5.0% Growth Target?
Beijing is hoping for annual growth of 4.5 to 5.0 percent this year, its lowest goal in decades. Sluggish domestic demand is weighing on its export strength.
“Strong exports alone are not enough to boost the economic momentum,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management. He warned that if external demand weakens in 2027, China will need more significant policy support for domestic demand.
Which Bursa Stocks Are Worth Monitoring on China’s Factory Data?
The source does not name any Bursa-listed company, so company-level impact depends on each firm’s China exposure. Three exposures stand out from the data:
- Input-cost users: firms buying coal, rubber or plastic products, which are rising with crude oil.
- Consumer goods sellers: businesses facing a 1.9-point PMI drop in that segment.
- Construction and finance-linked names: exposed to the slowdown in both sectors.
Investors may want to watch how these exposures appear in each company’s next reported results.
Key Takeaways
- China’s manufacturing PMI fell to 49.3 in October, below 50 and the 49.9 forecast.
- A week-long national holiday and an volatile international environment weighed on factory output.
- Higher crude oil prices are lifting coal, rubber and plastic costs.
- The non-manufacturing PMI fell to 49.7, with construction and certain service sectors slowing.
- Beijing’s 4.5 to 5.0 percent growth target depends on domestic demand, not just exports.
Frequently Asked Questions
What was China’s manufacturing PMI in October?
China’s manufacturing PMI was 49.3 in October, below the 50 mark that separates expansion from contraction. It missed the Bloomberg survey forecast of 49.9 and was down from 50.1 in September.
Why did China’s factory activity fall in October?
NBS statistician Huo Lihui said a week-long national holiday at the start of the month was a key factor. She also cited a ‘complex and volatile international environment’.
What is China’s growth target this year?
Beijing is hoping for annual growth of 4.5 to 5.0 percent this year, its lowest goal in decades. Sluggish domestic demand is weighing on its export strength.
Which Bursa Malaysia companies are affected by China’s PMI data?
The source does not name any Bursa-listed company. Exporters, companies buying coal, rubber or plastic inputs, and firms selling consumer goods into China are the exposures worth monitoring.
This article is for information only and is not investment advice. Do your own research before making any decision on Bursa Malaysia stocks.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
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