China’s Factory Activity Inches Up but Still in Contraction

China’s factory activity edged higher in November but remained stuck in contraction for the eighth consecutive month

sarah

Nov 30, 2025 - 17:05

China’s Factory Activity Inches Up but Still in Contraction

According to official data released on Sunday, China's factory activity increased in November but declined for the eighth consecutive month, while services weakened as the boost from the previous holidays faded.

The National Bureau of Statistics said the manufacturing Purchasing Managers' Index rose 0.2 points from October to 49.2. This figure was in line with economists' expectations in a Reuters poll, but remained below the 50-point mark that separates an increase and a decrease.

The non-manufacturing business activity index fell 0.6 points from October to 49.5, while the composite PMI output index fell to 49.7, indicating a slight decline in both manufacturing and services activity.

Huo Lihui, chief statistician of the bureau's Service Industry Survey Center, said that supply and demand in manufacturing improved slightly, with the production index reaching the 50 threshold and new orders rising to 49.2. High-tech manufacturing remained at 50.1 for the tenth consecutive month, while equipment manufacturing and consumer goods producers fell below 50. Energy-intensive industries showed a slight recovery, rising 1.1 percentage points from October to 48.4.

Business activity at small companies improved significantly. The PMI for small companies rose 2 percentage points to 49.1, the highest in nearly six months, while medium-sized firms rose to 48.9. Large manufacturers weakened, falling to 49.3.

Market confidence saw a slight increase. The index, which measures expectations for production and operations, rose to 53.1. Industries such as non-ferrous metal smelting and aerospace-related equipment showed particularly strong sentiment, with readings above 57.

Holiday momentum eased

Non-manufacturing activity, including construction and services, softened, which had been under pressure from services. Huo attributed some of this decline to the slowdown in holiday spending.

China's Golden Week holidays, which typically boost travel and consumer spending before activity normalizes in the following months, ran from October 1 to 8 this year.

Service-sector activity fell 0.6 percentage points from October to 49.5, although strength remained in some sectors: railway transportation, telecommunications, broadcasting and satellite transmission, and financial services all posted readings above 55.

Real estate and residential services remained below the 50 mark, reflecting continued weakness in property-related activity. Construction activity improved to 49.6, supported by strong expectations for short-term growth, and the sector's sentiment index climbed to 57.9.

The non-manufacturing new orders index fell to 45.7, indicating weak demand. Input prices rose to 50.4, and service-sector sales prices, while still below 50, eased their decline.

Employment in manufacturing increased slightly to 48.4, while non-manufacturing employment increased slightly to 45.3. Supplier delivery times for factories improved to 50.1.

China surveys approximately 3,200 manufacturing and 4,300 non-manufacturing firms for the monthly PMI reading, which is seasonally adjusted and considered a leading indicator of economic momentum.

Trade Pressure

China's manufacturing activity has contracted since April, when US President Donald Trump imposed new tariffs, putting pressure on producers.

Industrial profits fell 5.5% in October, the biggest drop since June, reversing the strong gains seen in late summer. Earnings for large industrial firms grew 1.9% in the first ten months, slowing from the January-September pace.

The larger Chinese economy has cooled, with growth falling to 4.8% in the third quarter.

Trade tensions with the US escalated in October, as Washington threatened new 100% tariffs, before the two sides reached a deal in South Korea at the end of the month. The agreement reduced US fentanyl-linked tariffs from 20% to 10%, suspended Beijing's rare-earth controls for a year, and reopened China's purchases of American soybeans and other agricultural inputs.

Despite this agreement, demand in the country remains weak. A prolonged property slowdown and weak labor conditions are weighing on consumer spending. Policymakers have signaled long-term steps to boost self-reliance in consumption and technology, but have refrained from major new stimulus as the economy remains on track to meet its 5% growth target.