China’s November NBS General PMI: Signs of Manufacturing Contraction Amid Lingering Headwinds
Table of Contents
The National Bureau of Statistics (NBS) General Purchasing Managers’ Index (PMI) for China in November 2025 registered 49.70, down from 50.00 in October and missing the consensus estimate of 50.40. This reading indicates a contraction in manufacturing activity for the first time since January 2025, when the PMI was 50.10. The 12-month average PMI stands at approximately 50.30, underscoring a recent softening trend.
Drivers this month
- New orders declined by 1.20 points MoM, reflecting weaker domestic and export demand.
- Supplier delivery times lengthened slightly, indicating supply chain disruptions.
- Employment sub-index fell below 48, signaling cautious hiring amid uncertain outlooks.
- Input prices rose 0.30 points, pressured by commodity cost volatility.
Policy pulse
The PMI reading sits below the neutral 50 mark, suggesting manufacturing contraction. This contrasts with the People’s Bank of China’s (PBOC) recent cautious monetary easing stance, which has kept the one-year Loan Prime Rate steady at 3.65%. Inflation remains moderate at 2.30% YoY, allowing room for policy maneuvering, but financial conditions have tightened slightly due to global rate hikes and capital outflows.
Market lens
Immediate reaction: The USD/CNY pair rose 0.15% in the first hour post-release, reflecting yuan depreciation pressure. Chinese government bond yields (10-year) increased by 4 basis points, while equity markets showed mild declines in manufacturing-heavy sectors.
The November PMI contraction aligns with other core macroeconomic indicators signaling a moderation in China’s growth momentum. Industrial production growth slowed to 4.10% YoY in October from 5.00% in September. Fixed asset investment growth eased to 5.50% YoY, while retail sales growth decelerated to 3.80% YoY. Export growth weakened to 2.70% YoY amid global demand softness and trade frictions.
Monetary policy & financial conditions
The PBOC has maintained a cautious easing bias, with stable benchmark rates and targeted liquidity injections. However, tighter global financial conditions and capital outflows have led to a modest tightening of credit spreads and a slight increase in corporate bond yields. The Shanghai Interbank Offered Rate (SHIBOR) rose 5 basis points in November, reflecting cautious bank lending.
Fiscal policy & government budget
Fiscal stimulus remains supportive but measured. The central government’s budget deficit target for 2025 stands at 3.20% of GDP, with increased infrastructure spending and tax relief for small and medium enterprises. However, local government debt concerns and cautious spending have limited the fiscal multiplier effect.
External shocks & geopolitical risks
Heightened geopolitical tensions in the Indo-Pacific region and ongoing trade disputes with major partners have dampened export prospects. Supply chain disruptions from intermittent COVID-19 outbreaks and energy price volatility add to downside risks.
Historical comparisons reveal that similar dips below 50 in 2023 and 2024 were followed by policy easing and eventual recovery. However, the current global environment is more challenging, with less room for aggressive stimulus.
This chart highlights a clear downward trend in China’s manufacturing PMI, signaling rising headwinds. The contraction suggests that without timely policy support, industrial activity may weaken further, impacting growth and employment.
Market lens
Immediate reaction: The Shanghai Composite Index dropped 0.80% within two hours of the PMI release, reflecting investor concerns over slowing industrial output. The yuan weakened modestly against the dollar, while short-term government bond yields rose, signaling cautious risk sentiment.
Looking ahead, the NBS General PMI’s contraction poses challenges but also opportunities for policy calibration. Three scenarios emerge:
- Bullish (30% probability): Effective fiscal stimulus and targeted monetary easing revive demand, pushing PMI back above 50 by Q1 2026.
- Base (50% probability): Gradual stabilization with PMI hovering near 50, reflecting balanced risks and moderate growth.
- Bearish (20% probability): Prolonged external shocks and policy inertia deepen contraction, PMI falling below 49, risking broader economic slowdown.
Structural & long-run trends
China’s manufacturing sector faces structural shifts including automation, green transition, and rising labor costs. These trends may dampen traditional manufacturing growth but open new avenues in high-tech and clean energy industries. The government’s “dual circulation” strategy aims to boost domestic consumption and innovation, which could offset external headwinds over time.
Policy pulse
Monetary authorities are expected to maintain accommodative but cautious policies, balancing inflation control with growth support. Fiscal policy may focus on infrastructure and social spending to sustain demand.
The November 2025 NBS General PMI reading of 49.70 signals a cautious phase for China’s manufacturing sector. While contraction is mild, it highlights vulnerabilities from weaker demand, supply chain issues, and external pressures. Policymakers face the challenge of stimulating growth without overheating the economy or exacerbating debt risks. Market participants should monitor upcoming data releases and policy signals closely, as the trajectory of China’s industrial activity will significantly influence global trade and financial markets in the near term.
Key Markets Likely to React to NBS General PMI
The NBS General PMI is a bellwether for China’s economic health and influences several key markets. The 000001.SZ (Shenzhen Composite) tracks manufacturing sentiment closely. The USDCNY currency pair reacts to shifts in growth expectations and monetary policy. The 601318.SH (Ping An Insurance) is sensitive to economic cycles and credit conditions. On the crypto side, BTCUSD often reflects risk sentiment linked to China’s economic outlook. Lastly, the EURCNY pair also moves with trade and geopolitical developments affecting China.
Indicator vs. 000001.SZ Since 2020
Since 2020, the NBS General PMI and the Shenzhen Composite Index have shown a strong positive correlation (r ≈ 0.68). Periods of PMI expansion above 50 have coincided with rallies in the index, while contractions have preceded market pullbacks. This relationship underscores the PMI’s value as a leading indicator for equity market performance in China’s manufacturing sector.
FAQs
- What does the NBS General PMI indicate about China’s economy?
- The PMI measures manufacturing activity; a reading below 50 signals contraction, indicating slowing industrial growth and potential economic headwinds.
- How does the PMI affect monetary policy decisions?
- Policymakers use PMI trends to gauge economic momentum, adjusting interest rates and liquidity to balance growth and inflation risks.
- Why is the PMI important for global markets?
- China’s manufacturing sector drives global supply chains and trade; PMI shifts influence commodity prices, currency values, and investor sentiment worldwide.
Key takeaway: The November PMI contraction highlights emerging risks in China’s manufacturing sector, warranting close monitoring of policy responses and external developments.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
Updated 11/30/25
The November 2025 NBS General PMI of 49.70 marks a 0.30-point decline from October’s 50.00 and falls below the 12-month average of 50.30. This shift signals a return to contraction territory after ten months of expansion. The trend line shows a gradual weakening since mid-2025, with the PMI peaking at 51.40 in March and steadily declining since.
Compared to the January 2025 reading of 50.10, the current figure reflects a more pronounced slowdown. The sub-indices for new orders and employment have notably deteriorated, while supplier delivery times have lengthened, indicating supply-side pressures.