Standard Chartered economists report that renewed trade frictions and slowing domestic demand likely constrained China’s economic momentum in October, with several key indicators showing signs of softening.
The official manufacturing PMI slipped to 49, matching the six-month low last seen in April — a period marked by heightened US-China trade tensions. The production sub-index fell below the neutral 50 threshold for the first time since April, while new orders and new export orders dropped 0.9 and 1.9 points to 48.8 and 45.9, respectively, signaling weaker demand both at home and abroad.
Although the services PMI showed modest improvement, construction activity declined further, highlighting uneven momentum across sectors.
Exports and Industrial Activity
Standard Chartered notes that export growth likely remained flat in October due to base effects, though the two-year compound annual growth rate (CAGR) may have improved slightly as exporters front-loaded shipments ahead of potential tariff re-escalations in November.
Given softer external demand, industrial production (IP) growth likely normalized after the September spike, while fixed-asset investment may have declined further amid a continued real estate slowdown and weaker business sentiment. Project construction was also likely affected by long holiday disruptions during the month.
Domestic Demand and Inflation Trends
The bank expects retail sales growth to have slowed sharply, partly due to base effects and fading stimulus impacts. On prices, headline CPI likely fell month-on-month, reflecting lower food and fuel costs, while core CPI likely remained stable.
Meanwhile, Producer Price Index (PPI) inflation may have edged higher on the back of rising coal and non-ferrous metal prices.
Credit and Fiscal Dynamics
According to Standard Chartered, loan and Total Social Financing (TSF) growth probably eased in October as loan demand remained subdued amid rising uncertainty. Government bond issuance also narrowed, with financing constrained after earlier front-loaded issuance exhausted much of the remaining quota.