Home ›› 01 Oct 2021 ›› World Biz
China’s factory activity unexpectedly shrank in September due to wider curbs on electricity use and elevated input prices, while services returned to expansion as Covid-19 outbreaks receded, offering some relief to the world’s second-biggest economy.
The official manufacturing Purchasing Manager’s Index (PMI) was at 49.6 in September versus 50.1 in August, data from the National Bureau of Statistics (NBS) showed on Thursday, slipping into contraction for the first time since February 2020.
China’s economy rapidly recovered from a pandemic-induced slump last year, but momentum has weakened in recent months, with its sprawling manufacturing sector hit by rising costs, production bottlenecks and electricity rationing.
Rising Covid-19 cases in tens of cities over the summer also disrupted the manufacturing and the services sectors, though the latter is starting to bounce back as the outbreaks receded.
A sub-index for factory output contracted in September for the first time since February last year, dragged down by a pullback in high-energy consuming industries, such as plantsthat process metalsand oil products.
The gauge stood at 49.6 versus 50.1 a month earlier.
“In September, due to factors such as low volumes of business at high energy-consuming industries, the manufacturing PMI fell below the critical point,” said Zhao Qinghe, a senior NBS statistician, in an accompanying statement.
“The two indexes of high energy-consuming industries ...are both lower than 45.0, indicating a significant drop in supply and demand.”
Growth Outlook
The sudden contraction in factory activity will further weigh on an economy already hit by curbs on its property and tech sectors and facing many growth downgrades by private-sector economists.
Other economies in Asia are also grappling with production issues due to supply chain disruptions, with data on Thursday showing Japan’s industrial output falling for a second straight month in August.
