China’s economic slowdown intensified in October, primarily influenced by tepid consumer spending and an escalating property market slump. The extended holiday period further hampered manufacturing activity.

According to the latest data from the National Bureau of Statistics released on Friday, fixed-asset investment, which encompasses real estate, decreased by 1.7% during the first ten months of the year. This marks a sharper decline compared to a 0.5% drop observed from January to September. Analysts surveyed by Reuters had anticipated a smaller decline of 0.8%.

The last instance of a contraction in China’s fixed-asset investment occurred in 2020, amidst the global pandemic, as per historical data from Wind Information, a private database specializing in Chinese economic metrics dating back to 1992.

Goldman Sachs’ estimates indicate that on a month-to-month basis, fixed-asset investment plummeted by 11.4% compared to the previous year. This is the weakest performance since early 2020 when the initial Covid lockdowns were implemented. The bank attributed this decline to the Chinese government’s initiatives to address industrial overcapacity and the ongoing housing market downturn.

Within that segment, property investment continued to decline, shrinking 14.7% in the year through October, compared with a 13.9% contraction in the first nine months.

Manufacturing investment rose 2.7% and utilities spending, which includes electricity, fuel and water supplies, climbed 12.5%.

Industrial output expanded 4.9% in October, slowing from a 6.5% the prior month and missing expectations for a 5.5% jump.

China’s manufacturing activity contracted more than expected in October, falling to the lowest level in six months, as a weeklong holiday that ran from Oct. 1 to Oct. 8 shuttered most factories across the country.

Retail sales climbed 2.9% in October from a year earlier. While beating the 2.8% growth forecast in a Reuters poll, the consumption gauge fell for a fifth straight month to its lowest level this year, according to LSEG data.

The survey-based urban unemployment rate ticked down to 5.1% last month from 5.2% in September.

The sharp drop in fixed-asset investment was largely dragged down by lackluster investment in the property sector and infrastructure, according to Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.

Manufacturing investment has seen “modest and uneven growth,” with state-owned enterprises increasing spending on infrastructure, such as electricity, heat and gas supply, while foreign investment contracted sharply, Yuhan Zhang, principal economist of the Conference Board’s China Center, said in a note.

“We will continue to see policy-directed investment in infrastructure, advanced manufacturing, and industrial upgrading,” he added.

In a sign of persistently weak demand in the beleaguered housing sector, separate official data released on Friday showed China’s new home prices dipped 0.5% in October from the previous month, the steepest month-on-month decline since October last year. Home prices fell 2.2% in October on an annual basis.

Consumer prices rose 0.2% from a year earlier in October, the strongest inflation reading since January this year and the first positive growth since June, according to LSEG data.

The core CPI, which strips out food and energy, rose 1.2% from a year earlier, the highest since February 2024, according to data provider Wind Information.

China’s exports in October unexpectedly contracted for the first time in nearly two years as tensions with Washington over trade escalated before a deal was reached at the month’s end.

U.S. President Donald Trump and Chinese leader Xi Jinping agreed last month to trim their tit-for-tat tariffs and suspend a raft of restrictive measures for one year.

Economists widely expect the  as businesses’ front-loading activity tapers off, and global demand may not fully offset a deepening decline in U.S.-bound shipments, putting Beijing under greater pressure to stimulate domestic demand.

“I don’t expect stimulus to happen in the rest of this year,” said Zhang, noting the economy appears to remain on track to achieve its 5% growth target, although fiscal policy may turn more supportive at the start of next year.

China’s economic growth slowed to 4.8% in the third quarter, following expansions of 5.2% in the second quarter and 5.4% in the first quarter.