The benchmark of 50 is what distinguishes an expanding from a contracting economy. In September, the PMI was slightly higher at 51.1, reports Reuters.

The decline reflects the slowdown in orders and increasing costs as both local and international orders went down, indicating hazy growth prospects for the Asian giant. The weak demand was felt with rising levels of inventory as unsold products remain in stockrooms despite the cuts in production and lesser stock of raw materials.

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China Logistics Information Center economist Chen Zhongtao attributed the lower PMI partly to the week-long National Day holiday that began on Oct. 1.

After the release of the PMI, China International Capital Corp. economists wrote in a note to clients that "There remains downward pressure on the economy, and monetary policy will remain easy."

Recovery appears to be a distant scenario since new orders index declined to 51.6 in October from 52.2 in September, while new export orders dipped to 49.9 from 50.2 for the same months.

However, NBS statistician Zhao Qinghe does not consider the lower PMI alarming since "Despite the declines, the reading remained above the expansion-contraction threshold and indicates China's manufacturing sector was steady as the economy is entering a 'new normal,'" quoted WantChinaTimes.

Zhao added that contraction was felt mostly by medium and smaller manufacturers, while bigger businesses enjoyed relatively good performance.

It is not just the manufacturing sector that is reeling from contraction, but also the Chinese national economy as the country's gross domestic product dipped to 7.3 percent in Q3. It is the lowest growth rate for China since the 2008 global financial crisis.

Tagspurchasing managers' index, manufacturing sector