China’s Factory Sector Marks Sixth Consecutive Contraction in September

China’s industrial landscape showed continued cooling in September, with the official manufacturing PMI registering 49.8—still under the 50 mark that signals contraction—after a slight rise from August’s 49.4. The extension of this downward trend into its sixth straight month highlights the stiff headwinds facing the country’s manufacturing base.
The underlying story remains one of soft domestic demand and intensifying uncertainty over U.S. trade policy. Many manufacturers are exercising caution, deferring capital expenditures and postponing production ramp-ups until more favorable signals or fresh fiscal stimulus emerge. The muted private sector survey keeps hopes alive: the RatingDog / S&P Global measure climbed to 51.2 in September, reflecting stronger order flows and production in export-driven segments. Yet the gap between the official and private PMI readings amplifies the unevenness characterizing China’s growth.
Services and construction sectors are showing signs of strain as well. The non-manufacturing PMI eased to exactly 50.0 from 50.3, signaling that growth in those areas is barely holding on. Even so, the composite PMI—combining both manufacturing and non-manufacturing—nudged upward to 50.6, hinting that pockets of resilience remain, though the sustainability of that balance is far from assured.
From a macro perspective, China’s industrial malaise is a red flag for global supply chains and commodity exporters. The persistent contraction suggests that domestic stimulus and credit easing have only partially countered deflationary forces and structural headwinds in property and consumption. The divergence between official and private PMI data suggests Beijing may need to fine-tune its support mix, targeting sectors most sensitive to trade and weak demand.
Investors should watch closely for narrative shifts in China’s policy playbook—especially regarding credit inflation, infrastructure spending, and export incentives. The rebound in private PMI is encouraging but not conclusive; if external demand weakens or policy missteps occur, renewed downside risk may ripple through emerging markets broadly