China's Services and Construction Sectors Contract for First Time Since 2022
China's non-manufacturing activity entered contraction territory in November 2025 for the first time in nearly three years, according to official data released by the National Bureau of Statistics. The key economic indicator fell below the critical 50-point mark that separates expansion from contraction, signaling potential challenges ahead for the world's second-largest economy.
PMI Data Shows Significant Decline
The non-manufacturing purchasing managers' index (PMI), which comprehensively tracks both services and construction sectors, dropped to 49.5 in November 2025 from 50.1 recorded in October. This represents the lowest reading since December 2022 and marks the first time the index has fallen below the 50-point threshold that indicates economic expansion.
The November reading of 49.5 indicates a contraction in business activity across China's substantial non-manufacturing sectors. The decline from October's marginally expansionary reading of 50.1 suggests a noticeable deterioration in business conditions during the month.
Historical Context and Economic Implications
This contraction represents a significant milestone as it's the first time in nearly three years that China's non-manufacturing sectors have shown contraction. The services sector, which includes everything from retail and transportation to hospitality and finance, along with construction activity, collectively failed to maintain growth momentum.
The data, published on November 30, 2025, comes at a crucial time for China's economy as policymakers balance multiple economic challenges. The non-manufacturing PMI is closely watched by global investors and economic analysts as it provides early signals about the health of China's domestic economy and consumer demand.
Economic experts are particularly concerned because the services sector has been a key driver of China's economic growth in recent years, especially as manufacturing faced global headwinds. The contraction in November suggests that domestic demand might be weakening, which could have broader implications for China's economic recovery trajectory.
The National Bureau of Statistics data indicates that both new orders and business expectations components likely contributed to the overall decline, though detailed breakdowns will provide more clarity on specific pressure points within the non-manufacturing ecosystem.
