China's manufacturing PMI hit a five-month high, while the decline in services selling prices was the steepest in over four years.

The Chinese economy delivered a strong performance at the end of the third quarter of 2026.

On September 30, S&P Global and RatingDog jointly released China's latest Purchasing Managers' Index (PMI) data, showing that the RatingDog September manufacturing PMI rose to 52.1, the highest in five months. The services PMI also accelerated its expansion, and the composite PMI strengthened in tandem, indicating that the resonance of domestic and external demand is driving a continued recovery in economic momentum.

On the manufacturing side, new orders grew for the 16th consecutive month, export orders posted their best performance since February, and capacity expansion drove employment higher for the third time in four months. Overall momentum was notably better than the previous month. Yao Yu, founder of RatingDog, said the manufacturing PMI is expected to remain in expansion territory in the near term.

On the services side, new business growth was the fastest since June, and employment rose for the fifth consecutive month. However, fierce market competition forced companies to cut selling prices, with the rate of decline the fastest since April 2022. The divergence between costs and selling prices is squeezing corporate profit margins.

On a composite basis, the RatingDog Composite Output Index rose from 52.1 in August to 52.4 in September, a three-month high. Manufacturing and services both achieved comprehensive improvements in output, new orders, exports and employment, while business confidence rose to a four-month high.

Manufacturing: PMI hits five-month high, expansion accelerates on dual drivers of domestic and external demand

Data showed that the RatingDog China Manufacturing PMI came in at 52.1 in September, up 0.6 percentage points from 51.5 in August. It stood above the boom-or-bust line for the 10th consecutive month and was the highest reading since April this year. Among the five sub-indices, all contributed positively to the composite index except for a slight decline in purchasing inventories.

The demand side was particularly outstanding. Total new orders grew for the 16th consecutive month at the fastest pace in five months. Some companies, anticipating cost increases, actively built safety stocks, further boosting purchasing willingness. New export orders expanded for the third consecutive month at the best rate since February this year, reflecting a significant improvement in overseas market demand.

Driven by demand, manufacturing output also accelerated, recording growth for the 10th consecutive month, with the pace comparable to that of new orders. Consumer goods producers performed the strongest on both new orders and output.

On employment, mounting backlogs of unfinished orders prompted companies to step up hiring, with both permanent and temporary staff numbers increasing in tandem. The employment index rose for the third time in four months, although the pace of increase remained slight. Hiring was mainly concentrated in the consumer goods sector, while investment goods producers saw a modest increase in employment and intermediate goods companies continued to cut jobs.

On prices, rising raw material costs—particularly metals and oil—pushed the input cost inflation rate to a four-month high in September. Companies responded by slightly raising factory gate prices, reversing the marginal decline in August, and export prices also edged up.

Yao Yu noted that the rebound in factory gate prices has somewhat eased recent profit pressures, but persistently strong cost inflation and supplier delivery delays still warrant vigilance. Supplier delivery times have now lengthened for the seventh consecutive month.

On inventories, purchasing activity grew for the 10th consecutive month, and the inventory accumulation cycle was the longest since 2006–2007. However, some companies drew down inventories to fulfill new orders, causing the pace of accumulation to slow compared with August.

Yao Yu said that for the outlook over the next 12 months, manufacturing confidence improved further from August. Companies generally expect global macroeconomic conditions to improve, supported by new product launches and business expansion plans, although the confidence index overall remains below its long-term average.

Services: Activity accelerates for second straight month, but decline in selling prices is steepest in over four years

The RatingDog China Services Business Activity Index rose to 51.6 in September from 51.4 in August, a slight uptick and the fastest growth in three months. It marked the second consecutive month of accelerating expansion, though the overall pace of expansion remained moderate.

New business was the core driver of services expansion this month. Total new orders grew for the 45th consecutive month at the fastest pace since June. The effectiveness of corporate marketing and business development efforts, along with a general improvement in market demand conditions, supported this performance. This growth streak has been unbroken since it began in January 2023.

Meanwhile, new export business accelerated for the first time in three months, extending the current expansion cycle to five months, the longest since 2024.

The job market continued its positive trend, with services employment rising for the fifth consecutive month and both full-time and part-time staff increasing. However, the pace of growth was the slowest in four months and remained slight, with overall capacity pressures moderate. Outstanding business accumulated for the 11th consecutive month, but the pace of accumulation slowed for the fourth consecutive month, as previously expanded workforce capacity provided some buffer against order backlogs.

A cautionary divergence emerged at the price level. Services input costs rose for the 19th consecutive month, driven mainly by salaries, raw materials and energy expenses, although the inflation rate eased slightly from August.

At the same time, however, fierce market competition forced companies to offer discounts to attract customers. Services factory gate prices fell in September for the first time in four months, with the rate of decline the steepest since April 2022. Yao Yu said the combination of rising costs and falling selling prices is eroding corporate profit margins and warrants continued attention.

On the outlook, services business confidence improved further from August and matched manufacturing confidence at the highest level so far in 2026. Companies generally attributed their optimism to improving market demand, progress on expansion plans and new project launches. Yao Yu expects the services PMI to remain in expansion territory in the near term.

Composite PMI: Three-month high, business confidence at four-month peak

The RatingDog Composite Output Index came in at 52.4 in September, up 0.3 percentage points from 52.1 in August, reaching a three-month high, though still slightly below the 2026 year-to-date average. Manufacturing and services both achieved simultaneous improvements in output, total new orders, new export orders and employment, indicating a broadening of economic momentum.

Business confidence rose to a four-month high at the composite level, with companies in both sectors holding positive expectations for the next 12 months. They attributed their optimism to expectations of improved domestic and international macroeconomic conditions, new product launches and business expansion plans.

However, composite price indicators sent a notable signal. Cost pressures intensified in September, mainly concentrated in manufacturing and driven by rising commodity prices such as metals and oil. Meanwhile, the composite factory gate price index turned negative for the first time in nine months, primarily due to services companies offering substantial discounts under competitive pressure.