China’s Manufacturing Sector Shows Mixed Signals Amid Economic Challenges

China's factory activity continued its contraction for the sixth consecutive month in September, with the official Purchasing Managers' Index (PMI) edging up to 49.8 from August's 49.4. While marking the highest reading since March, the figure remained below the 50-point threshold separating expansion from contraction. Reuters-polled analysts had expected 49.6.

The persistent weakness underscores dual headwinds facing the world's second-largest economy: sluggish post-pandemic domestic consumption and ongoing pressure from U.S. trade tariffs. Yet a separate private-sector survey painted a more optimistic picture, with export-oriented manufacturers reporting their strongest growth since March on improved orders and production rates.

This divergence reflects the surveys' differing samples—the official PMI tracks predominantly domestic-focused state enterprises, while S&P Global's RatingDog PMI (which ROSE to 51.2 from 50.5) captures more export-reliant private firms. Seasonal factors and selective policy support may be driving the private sector's outperformance.