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China’s manufacturing activity also contracted more than expected in October, falling to a six-month low as most factories across the country were shut during a week-long holiday from 1 to 8 October.

The slowdown in China worsened further in October amid weak consumer demand and a deepening downturn in the property sector. The long holiday period also weighed negatively on factory activity.

According to data released on Friday by the National Bureau of Statistics, fixed-asset investment, including real estate, shrank by 1.7 percent in the first ten months of the year, following a 0.5 percent decline in the January–September period.

Data from Wind Information, a China-focused private database with records going back to 1992, show that the last time China recorded a contraction in fixed-asset investment was in 2020, during the pandemic.

Goldman Sachs estimates that, on a single-month basis, fixed-asset investment fell by 11.4 percent year-on-year in October, the weakest figure since early 2020 when the first Covid restrictions were introduced. The bank linked this decline to Beijing’s efforts to rein in excess industrial capacity and the downturn in the housing sector.

Within this segment, real estate investment continued to fall, contracting by 14.7 percent in the period through October, after a 13.9 percent decline in the first nine months. Manufacturing investment rose by 2.7 percent, while spending on public utilities – including electricity, fuel and water supply – increased by 12.5 percent. Industrial production grew by 4.9 percent in October, slowing from 6.5 percent the previous month and missing the 5.5 percent growth forecast.

The survey-based urban unemployment rate edged down from 5.2 percent in September to 5.1 percent last month. As another sign of persistently weak demand in the troubled housing sector, separate official data released on Friday showed that new home prices in China fell by 0.5 percent in October from the previous month, the sharpest monthly drop since October last year. On an annual basis, home prices declined by 2.2 percent.

According to analysts, consumer prices rose by 0.2 percent year-on-year in October, marking the highest inflation reading since January and the first positive growth since June. Core CPI excluding food and energy increased by 1.2 percent year-on-year, reaching its highest level since February 2024, according to data provider Wind Information.

China’s exports unexpectedly contracted in October for the first time in almost two years, as trade tensions with Washington escalated before an agreement was reached at the end of the month. U.S. President Donald Trump and Chinese leader Xi Jinping agreed last month to reduce reciprocal tariffs and suspend a series of restrictive measures for one year.

Economists predict that Beijing will come under greater pressure to stimulate domestic demand, as declining front-loading by businesses and weak global demand may not fully offset the deepening fall in shipments to the United States.