Manufacturing activity contracted in September in China, a first since early 2020, due in particular to power cuts that weighed on an already slowing economy, according to official figures released Thursday. The Purchasing Managers Index (PMI), which measures the activity of factories nationwide, stood at 49.6, down from 50.1 in August, the National Bureau of Statistics (BNS) said. A number greater than 50 indicates an expansion of the activity and, below, it indicates a contraction.
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This is the first time that the official PMI has entered negative territory since February 2020, when the Covid-19 epidemic was raging and a large number of factories were shut down. A group of analysts interviewed by the Bloomberg agency had anticipated a decline in the index, but of lesser magnitude. At least 17 provinces have been hit by power cuts in recent months, a situation made worse by a shortage of coal, which has led to skyrocketing prices.
Restrictions imposed by local authorities on factories to reduce energy consumption and meet climate targets have led some institutions and banks to downgrade their annual GDP forecasts for China. The PMI fell below 50 ″due to several factors including the relatively low activity of industries requiring high energy intensityNBS statistician Zhao Qinghe conceded Thursday.
The Chinese economy has largely recovered from the initial shock of the pandemic, but small sporadic outbreaks of Covid-19 are helping to dampen activity.
Employment under pressure
For its part, the independent Caixin-Markit PMI index, also announced Thursday, stood at 50 for September. While this is an increase from August (49.2), it is still the second lowest level recorded in 17 months. The outbreaks of Covid and the shortages of raw materials “continue to slow down the economy“, But aggregate demand has increased, even if it remains weighed down by”the drop in new orders abroadEconomist Wang Zhe commented for Caixin.
On the employment side, the market remained under strong pressure, with companies being cautious about new hires. “Overall, conditions in the manufacturing sector improved in September (…) but this improvement was limited», pointe Wang Zhe.
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The Caixin survey mainly surveys SMEs, and is therefore reputed to provide a more accurate picture of the economic situation than the government figure, which more closely reflects the situation of large state groups. For its part, the official activity index in the non-manufacturing sector stood at 53.2 points in September, against 47.5 in August, according to the SNB. Business was boosted in particular by the recovery of the air and rail transport sectors, as well as the hotel and catering industry.
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