Core Viewpoint - In October, China's manufacturing Purchasing Managers' Index (PMI) fell to 49.0%, indicating a contraction in manufacturing activity, while the non-manufacturing business activity index rose slightly to 50.1%, suggesting stability in the overall economy [1][3]. Manufacturing Sector Analysis - The manufacturing PMI decreased by 0.8 percentage points from the previous month, ending a two-month upward trend, with all 13 sub-indices showing declines ranging from 0.1 to 2.6 percentage points [3]. - The manufacturing production index dropped to 49.7%, down 2.2 percentage points, indicating a shift from expansion to contraction, although it remains close to the neutral level of 50% [3]. - Factors contributing to the slowdown include pre-holiday demand release and increased international trade uncertainties, leading to cautious production intentions among manufacturers [3][4]. Demand and Export Trends - The new export orders index fell to 45.9%, a decrease of 1.9 percentage points, marking the second-lowest point this year, primarily due to global economic pressures and trade uncertainties [4]. - Key sectors such as equipment manufacturing, high-tech manufacturing, and consumer goods manufacturing, which are crucial for exports, experienced significant tightening in new orders, impacting overall market demand [4][6]. Key Industries Performance - Despite the challenges, the three key industries—high-tech manufacturing, equipment manufacturing, and consumer goods manufacturing—maintained PMIs above 50, indicating continued expansion [6][7]. - The production and new orders indices for these sectors hovered around 51%, reflecting stable growth supported by domestic market strength and effective policy measures [7]. Price Trends and Cost Pressures - In October, the purchasing and factory gate price indices for equipment manufacturing rose for three consecutive months, with the factory price index reaching a new high since June 2024 [7]. - The consumer goods manufacturing sector saw a decrease in the purchasing price index, indicating reduced cost pressures, which is beneficial for profitability in this sector [8]. Non-Manufacturing Sector Insights - The non-manufacturing business activity index increased to 50.1%, remaining above the neutral level, with significant contributions from sectors related to consumer spending during the holiday season [10]. - The construction sector showed signs of acceleration, with the civil engineering business activity index rising significantly, indicating a positive outlook for infrastructure investment in the fourth quarter [10].