The nation's factory activity shrank in October, official data showed on Monday, after industries were hit by the pandemic.

The Purchasing Managers' Index (PMI) – a key gauge of manufacturing in the world's second-biggest economy – came in at 49.2, down from September's 50.1 and below the 50-point mark separating growth from contraction, according to data from the National Bureau of Statistics (NBS).

It said the pandemic on the mainland has dampened demand.

"In October, affected by the frequent appearance of domestic outbreaks, China's purchasing managers' index declined," NBS senior statistician Zhao Qinghe said in a statement.

Zhao said "the foundation for China's economic recovery and development needs to be further consolidated," noting both weakened demand and rising raw material prices.

While activity at larger businesses expanded in October, work at small and medium-sized enterprises contracted significantly, with Zhao saying "the pressure on production and operation at small and medium-sized enterprises has increased."

Meanwhile the non-manufacturing PMI came in at 48.7 points in October, a sharp decline from 50.6 in September and "below a critical point", Zhao said in the statement.

Zhao said Covid outbreaks in October had hit the service industry especially hard, with activity by transport, accommodation and food and beverage businesses falling during a traditional peak period coinciding with week-long national holidays. (AFP)