MediumIV Macro Policy & Sovereign Debt30 September 2026, Wednesday · 04:30 TRT (UTC+3)
China's factories exit two months of contraction as cost pressure intensifies
China's National Bureau of Statistics said on 30 September that the manufacturing PMI rose 0.3 points to 50.1. The non-manufacturing index, which covers services and construction, climbed to 50.2. The input price index for major raw materials jumped from 56.6 to 60.8.
According to the National Bureau of Statistics release of 30 September, the manufacturing PMI (purchasing managers' index; a reading above 50 signals expansion) rose from 49.8 in August to 50.1. The index for large enterprises held steady at 50.6, while medium-sized firms rose to 49.7 and small firms to 48.9. The production sub-index gained 1.3 points to 51.7, whereas new orders slipped 0.1 points to 50.5. New export orders eased from 50.1 to 50.0, and the employment index fell to 48.4.
The same release showed a marked build-up of price pressure. The input price index for major raw materials rose from 56.6 to 60.8, and the output price index from 50.4 to 54.0. The non-manufacturing business activity index gained 1.2 points to 50.2, and the construction index rose 3.4 points to 50.3. The composite PMI output index stood at 50.7. The bureau says it samples 3,200 enterprises in manufacturing and 4,300 outside it.
According to a Bloomberg report carried by Business Standard, the 50.1 reading matched economists' forecasts, and manufacturing expanded for the first time since June. The private RatingDog manufacturing PMI, which tracks smaller and export-oriented firms, rose to a five-month high of 52.1 in September. The report says the data came hours after the government announced its largest stimulus step in 2 years; the annual growth target is in the 4.5–5% range.
Talay assessment
Bottom line
The September data show Chinese manufacturing moving back into expansion on the back of stimulus, but the recovery is concentrated among large firms and on the production side. Flat new orders and weak employment suggest that demand has not yet broadened. The jump in input prices is a fresh source of pressure on profitability and export prices.
Likely effects
- Global commodity demandPositiveWeeks
The rise in the production index to 51.7 and the return of construction to 50.3 point to near-term support for China's raw material purchases.
- Chinese producer pricesUncertain1–6 months
With the input price index at 60.8 and output prices at 54.0, costs are being passed on to selling prices, which could ease deflationary pressure.
- Türkiye's exportersUncertain1–6 months
Higher Chinese output prices could slightly narrow the price advantage of Chinese goods in markets where Turkish producers compete; this effect is not yet confirmed.
Possibilities, ranked
- 1Fragile expansion55%
Stimulus keeps the PMI around 50 in October and November, but new orders and employment stay weak.
Watch: New orders and employment sub-indices in the October PMI
- 2Broad-based recovery25%
The stimulus effect spreads to medium and small firms, and both indices rise above 50.
Watch: The small-enterprise PMI moving above 50
- 3Renewed contraction20%
Cost pressure and weak domestic demand push manufacturing back below 50.
Watch: The October manufacturing PMI falling below 50
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- China manufacturing PMI▲ 50.1
- Input price index▼ 60.8
- RatingDog manufacturing PMI▲ 52.1