China’s Factory Activity Shrinks For Second Consecutive Month Hit By Power Crunch, Pandemic, High Material Prices, Tepid Demand


Hit by power crisis, tepid demand, emergence of new Covid-19 clusters and high raw material prices, China’s factory activity contracted in October, country’s official news agency Xinhua reported.

The purchasing managers’ index (PMI) for China’s manufacturing sector came in at 49.2 in October, down from 49.6 in September, data from the National Bureau of Statistics showed on Sunday.

A reading above 50 indicates expansion, while a reading below reflects contraction.

China’s factory output in September grew at its most feeble pace since March 2020 due to power shortage and higher raw material prices.

China’s official October composite PMI, which includes both manufacturing and services activity, stood at 50.8, down from September’s 51.7.

“The production index has dropped to the lowest level since it was published in 2005, excluding the global financial crisis period in 2008/09 and the COVID outbreak in February 2020,” a Reuters report quoted Zhiwei Zhang, chief economist at Pinpoint Asset Management.

Battered by real estate crisis and crippling energy shortage, China’s economy grew by a tepid 4.9 per cent in the third quarter of 2021 compared to the same period a year earlier,

China’s GDP growth prospects in the fourth quarter also faces severe supply side challenges, which may further drag down China’s GDP growth for the whole of 2021