China’s economic momentum weakened in October as softer consumer demand, a prolonged property slump and the disruption of a national holiday weighed on activity across key sectors. New data from the National Bureau of Statistics showed sharper declines in fixed-asset investment and slower factory output, reinforcing concerns about the durability of the country’s post-pandemic recovery.
Fixed-asset investment fell 1.7 percent in the first ten months of the year, a steeper drop than the 0.5 percent decline recorded from January to September. The October figure also marked China’s first sustained contraction in this metric since the pandemic period in 2020. Analysts had expected a decline of just 0.8 percent.
Property downturn drags investment
The single-month reading for October showed fixed-asset investment down 11.4 percent from a year earlier, the weakest result since early 2020, according to estimates from Goldman Sachs. The downturn was most pronounced in real estate, where investment contracted 14.7 percent over the past year through October, compared with 13.9 percent in the first nine months.
Manufacturing investment grew 2.7 percent, while utilities spending climbed 12.5 percent, reflecting state-directed outlays on electricity, fuel and water infrastructure. Economists said the investment environment remains uneven, with foreign capital showing significant weakness and state-owned enterprises driving most of the growth.
Separate data underscored the strain on the housing market. New home prices fell 0.5 percent from September, the sharpest monthly drop since late last year, and decreased 2.2 percent from a year earlier. Economists said the ongoing correction in property values continues to dampen broader investment and household demand.
Factory output slows as holiday disrupts activity
Industrial output grew 4.9 percent in October year over year, down from 6.5 percent in September and below expectations for a 5.5 percent increase. Manufacturing activity contracted more than anticipated after a weeklong national holiday from October 1 to 8 shuttered factories across the country.
Retail sales rose 2.9 percent, marginally above forecasts, but the growth rate eased for a fifth straight month to its lowest level this year. Economists said weak consumption remains one of the biggest obstacles to stabilising China’s recovery.
The urban unemployment rate eased slightly to 5.1 percent from 5.2 percent in September, but analysts said job market pressures persist, especially in sectors linked to housing and exports.
Inflation edges up but demand stays fragile
Consumer prices increased 0.2 percent year over year in October, the strongest reading since January and the first positive print since June. Core inflation, excluding food and energy, rose 1.2 percent, its highest level since early 2024. Economists said the figures point to modest improvement but remain far from signalling a robust rebound in demand.
Exports unexpectedly contracted in October for the first time in nearly two years amid rising tensions with the United States. A tariff-reduction agreement reached later in the month between U.S. President Donald Trump and Chinese leader Xi Jinping eased some pressure, but economists warn that front-loading activity by exporters may fade as the year closes.
Despite the softer data, analysts said China remains broadly on track to meet its official five percent growth target for 2025. However, most expect fiscal support to strengthen early next year rather than in the final months of 2025 as policymakers balance stimulus needs with debt concerns.
China’s economy grew 4.8 percent in the third quarter, down from 5.2 percent in the second and 5.4 percent in the first, reflecting a gradual cooling in momentum.
