Canadian Manufacturing

China’s manufacturing slows for 2nd straight month in Oct

Analysts have warned activity may slow further as manufacturers grapple with the power crunch, shortages of materials and surging costs.

November 1, 2021  by Associated Press

China’s manufacturing activity contracted for a second straight month in October amid materials shortages and a widespread power crunch.

China’s official manufacturing purchasing managers index dipped to 49.2 in October, according to data released by the National Bureau of Statistics, down from 49.6 in September. The index is measured on a 100-point scale on which numbers above 50 show activity increasing.

The indicators are closely watched as a barometer of China’s economy. Analysts have warned activity may slow further as manufacturers grapple with the power crunch, shortages of materials and surging costs.

In a statement on Oct. 31, National Bureau of Statistics economist Zhao Qinghe said that the drop in factory activity was due to tightened power supplies, higher costs for materials and slowing supply and demand.

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Since September, local governments have been doubling down on meeting energy consumption targets set by Beijing to ensure China’s carbon emissions peak by 2030. Factories and companies were ordered to reduce or even halt production temporarily.

Industries like textiles, iron smelting and non-metallic mineral products were among the hardest hit, Zhao said.

At the same time, many manufacturers face bottlenecks in getting supplies and in getting their products to customers.

The monthly purchasing managers’ index by Caixin, a Chinese business magazine, suggested that manufacturing activity grew in October compared to the previous month as demand recovered.

Caixin’s monthly purchasing managers’ index rose to 50.6 in October, up from 50 September. The Caixin index tends to focus on smaller, export-oriented firms, while the official PMI by the National Bureau of Statistics focuses more on large enterprises.

Official data also showed that service sector activity slowed down in October, falling to 52.4 from 53.2 last month. The services sector has been slower to rebound due to the pandemic, and is currently affected by a number of COVID-19 outbreaks in northern China.

The composite PMI, which captures activity from both the manufacturing and services, declined to 50.8 from last month’s 51.7.


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