China PMI October 2021


China: Manufacturing PMI drops to over one-year low in October; Services PMI also declines

November 1, 2021

The National Bureau of Statistics' Manufacturing Purchasing Managers' Index (PMI) fell to 49.2 in October from September's 49.6. October's result marked the weakest reading since February 2020. Consequently, the index fell further below the 50-threshold, signaling a sharper deterioration in business conditions compared to the previous month.

The headline print largely reflected faster declines in production, new orders and employment. Moreover, supplier delivery times lengthened at a faster rate than in September. Only the PMI of large enterprises remained in expansionary territory, with the readings for medium-sized and small companies well below the 50-threshold. Meanwhile, the non-Manufacturing PMI fell from 53.2 in September to 52.4 in October, due to faster declines in employment and purchasing activity. Looking at individual sectors, both the construction and services sectors lost steam. PMI readings in October were likely held back by a resurgence of Covid-19 cases, power disruptions, elevated input prices and environmental curbs.

On the economic panorama, analysts at Nomura commented:

“We believe the real situation could be worse than headline PMIs due to the distortion from the suppliers’ delivery time sub-index and the failure of the PMI surveyor in catching the escalating anti-Covid restrictions in the last week of October. A big decline of the new orders sub-index to 48.8 in October from 49.3 in September does not bode well, in our view, either. For November, the non-manufacturing PMI could drop significantly on the new wave of Covid-19, while the manufacturing PMI could remain weak due to shocks from both the supply and demand sides. We […] see more downside risk to our already below-consensus 3.0% y-o-y Q4 GDP growth forecast.”

FocusEconomics panelists expect GDP to expand 5.4% in 2022, which is down 0.1 percentage points from last month’s forecast. In 2023, the panel foresees GDP expanding 5.4%.

Author:, Economist

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