China - November PMIs point to further slowdown

China Macro – Both manufacturing PMIs now in contraction territory, divergence narrows

China’s PMIs for November published over the past couple of days confirm a further weakening in growth momentum, on balance. To start with the manufacturing side, the official index published by NBS on Sunday rose modestly to 49.2, (October: 49.0), but a bit less than expected (consensus: 49.4). This marked the eight consecutive month that this index remained below the neutral 50 mark separating expansion from contraction. This was in fact the longest period on record of this index remaining in contraction territory, although we had seen an eleven-month period during 2023/early 2024 with below-50 readings that was abrupted only once by a 50.2 number (in September 2023). Meanwhile, the alternative manufacturing PMI – published by RatingDog on Monday –, which had been in expansion territory throughout most of 2025, fell by 0.7 points to 49.9, the first below-50 reading in four months. Note that the larger NBS survey has a stronger coverage of larger, state-owned firms, while RatingDog’s survey is more focussed on smaller, private, export-oriented firms. This also implies that the divergence between the two headline manufacturing PMIs came down significantly in November (to 0.7 points), down from 1.6 points in October. That said, looking at the various subcomponents of the PMIs, the difference between the export-subindices has risen sharply. The official export sub-index improved but remained well in contraction territory, while RatingDog’s equivalent jumped by 4.7 points to an eight-month high of 51.9.

Both services and composite PMIs down

Meanwhile, the official non-manufacturing PMI resumed its downward trend, dropping to below the neutral mark (49.5) for the first time since China’s messy Zero-Covid exit end-2022 (October: 50.1, consensus: 50.0). This was driven by the services sectors, partly reflecting the fading of a holiday-related spending boost in October. The sub-index for construction picked up a bit (to 49.6, from 49.1 in October), partly reflecting the filtering through of targeted stimulus, but remained below the neutral mark. As a result, the official composite PMI – a weighted average of the output components for manufacturing and non-manufacturing – dropped to 49.7 (October: 50.0); this was also the first time since end-2022 that this index was in contraction territory. This morning, RatingDog’s services PMI also came in lower, falling to a five-month low of 52.1 (October: 52.6, consensus: 52.1). RatingDog’s composite PMI fell to a four-month low of 52.1, although remaining in expansion territory.

More targeted support expected to safeguard GDP growth in 2026

All in all, the November PMIs, coupled with the latest hard macro data, paint a picture of the Chinese economy losing further steam as we near the end of the year. While the 2025 GDP growth target of around 5% is still within reach, we think the government will add further targeted stimulus and resume piecemeal monetary easing to safeguard GDP growth next year (see China Outlook 2026, The need to rebalance remains despite trade deal). Particularly against the background of ongoing US-China power play, it is unlikely that Beijing would tolerate a sharp deceleration in annual GDP growth in 2026. In the run up to the annual Central Economic Work Conference held later this month, Chinese authorities are said to consider some measures to support the ailing property sector, such as mortgage subsidies for new homebuyers, income tax rebates for mortgage borrowers, and the reduction of home transaction costs. These measures should also stem lingering risks in the financial system, as the property slump does not show signs of abating.