Thought of the Day

China's Economy Shows Modest Acceleration in October, Led by Strong Sales Growth


 
24 October 2025
 
The October Sales Managers Index (SMI) data for China indicates steady expansion in business activity, with the Headline All-Sector SMI rising to 51.2, reflecting modest growth in both Manufacturing and Services sectors. This improvement is primarily driven by robust sales performance, as shown in the chart below. The data, covering all sectors as well as manufacturing and services splits, points to a resilient economy despite heightened US-China trade tensions, including new tariffs and export controls implemented in early October.

China: All-Sector, Manufacturing & Services Sales Growth Indexes: October 2025
Diffusion Index: 50 = ’no growth’
China
China


SALES GROWTH: The All-Sector Sales Growth Index climbed to 54.3, an 18-month high, signalling the strongest demand increase in over a year. This uptick reflects sustained consumer and business spending, supported by government subsidies and infrastructure initiatives. In manufacturing, sales rose to 53.2, while services hit 55.3, both indicating broad-based resilience despite external trade disruptions. Sales managers in export-oriented industries reported steady order inflows, though some noted caution from international clients amid US tariff escalations.

BUSINESS CONFIDENCE: The Business Confidence Index eased to 52.5 in October, suggesting sales managers are adopting a more guarded outlook on near-term prospects. Manufacturing confidence dipped to 52.0, while services improved slightly to 53.0. This moderation likely stems from uncertainties surrounding the renewed tariffs on Chinese goods, which could further strain supply chains. Nonetheless, confidence remains well above the neutral 50 threshold, consistent with broader economic stabilisation efforts.

STAFFING LEVELS: The All-Sector Staffing Levels Index increased to 49.6, a three-month high, pointing to gradual workforce stabilisation. Manufacturing led with a rise to 50.4, its highest in 29-months, as firms respond to rising orders with selective hiring. Services, however, slipped to 49.1, highlighting ongoing caution in labour-intensive areas. Overall, employment trends suggest restrained expansion, with managers prioritising efficiency amid trade-related volatility.

SUMMARY: October's SMI data portrays China's economy as maintaining modest growth, bolstered by an 18-month high in sales across all sectors. Manufacturing continues to anchor expansion, with services contributing through demand strength. The evidence points to a balanced but cautious trajectory, with domestic policies like consumer subsidies providing a buffer against external shocks. As Beijing convenes its key economic planning meeting later this month, focus will remain on sustaining this momentum through targeted stimulus.

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