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China’s official manufacturing purchasing managers’ index slowed to 49.0, down from 49.8. This marked a 6-month low, tying April for the lowest level of the year. It came in below expectations for a smaller moderation to 49.6.

The slowdown was seen across all the major subcategories. Production fell into contraction for the first time in 6 months, down to 49.7. This was the lowest level since May 2023. The new orders subindex also fell after two consecutive months of increases, down to 48.8, the lowest level since August 2024. New export orders contributed to this decline, falling to a 6-month low of 45.9. Employment remained in contraction for a 32nd consecutive month. Yet, it saw a relatively smaller downturn of just 0.2pp to 48.3.

We saw large, medium, and small-sized enterprises all sliding into contractionary territory for the first time since April. The trend of larger enterprises outperforming continued in the month.

The downturn in the PMI marks a poor start to the fourth quarter and may cause some concern, given that growth has been supported by external demand and industrial activity. On a brighter note, the PMI has been in contractionary territory since April, but this has not translated into weakness in hard activity data. Come next month’s PMI data, it will be interesting to see if the tariff reduction and extended trade truce with the US help support a recovery of new export orders.

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Pick your poison: beer or cigarettes? Weak share prices are pushing cash yields on the biggest brewers closer to those of sin-bin stalwart, Big Tobacco. For investors with the bottle for a sector that seems to be sliding into pariah territory, that could spell opportunity. 

Recent news has contributed to investors’ sour mood. Shares in AB InBev, the world’s largest brewer and maker of Budweiser and Stella Artois beers, fell on Thursday despite an unexpectedly generous $6bn two-year share buyback. Numbers two and three, Heineken and Carlsberg, recently reported falls in quantity sold, and stuck with already-watered down profit forecasts.  

Over the past year, only shares in Carlsberg are in the black — and then, only barely. Its heftier rivals are each down roughly a tenth. Volumes have become a key metric for investors as brewers try to offset mature western markets with growth in less developed countries and in newer categories such as alcohol-free beer.

But key growth spots have gone flat, with Brazil hurt by bad weather and economic uncertainty — a factor in China too, which also this year banned alcohol from official events. Consumption in Vietnam, a market prized for its large, young population, has been slow to recover from the impact of a strict 2020 drink-driving law. 

Mega-brewers’ relegation from the premium to the bargain shelves has been a long process. From trading on at least 20 times expected earnings in 2020, the three brewers now trade on between 12 and 14 times 2026 forecasts. Investors appear to fear that consumption will flag under the influence of public health groups and a more alcohol-conscious younger generation. 

Investors gloomily peering into their half-empty glasses could choose to see things differently. Granted, neither Big Beer’s top nor bottom line have been effervescent of late. But managers have used a mix of price rises and cost cuts to boost free cash flow. AB Inbev, whose annual cash generation after investments is 9 per cent of its market capitalisation, is not far short of the 12 per cent yielded by tobacco stocks — a sector that has handsomely rewarded investors prepared to accept its sinful status.

Big Beer, for all its doubters, isn’t Big Tobacco. It still has growth potential if key markets steady. In the meantime, cash is a good consolation.

jennifer.hughes@ft.com