China's factory activity contracted in October at its fastest pace in three months, an official survey showed on Saturday, as soft demand, including for exports, weighed on manufacturers. The official manufacturing purchasing managers' index (PMI) fell to 49.3 from 50.1 in September, according to data from the National Bureau of Statistics.

The reading missed the 50.0 forecast in a Reuters poll of economists. A reading above 50 signals expansion, while a reading below 50 indicates contraction, so the October figure points to a shrinking factory sector after a month of modest growth.

What the survey measures

The PMI is compiled from purchasing managers' reports on whether conditions improved, worsened or stayed the same compared with the previous month, covering areas such as new orders, output and employment. It is watched as an early snapshot of manufacturing strength, ahead of harder data on industrial output and trade.

Before the release, economists had expected a broadly flat reading, with the median forecast pointing to a small dip from September. The sharper fall to 49.3 suggests demand softened more than anticipated during the month.

Context for the wider economy

The result follows a third quarter in which strong exports and solid industrial output supported growth, according to earlier reporting on the survey. Analysts have also noted a two-speed pattern in manufacturing, with advanced producers performing more strongly than older, legacy industries.

Attention will now turn to the private RatingDog manufacturing PMI, compiled by S and P Global, which is due on 2 November and was forecast to ease to 51.6 from 52.1 in September. China's economic planner is also drafting a plan to expand domestic demand for 2026 to 2030, an official said earlier in October.