Industry PMI Photo:VCG

China's manufacturing purchasing managers' index (PMI) contracted for the second month in a row in October as power shortages persisted and raw materials prices rose further, according to the National Bureau of Statistics (NBS).

Tight power supplies and the government's renewed efforts to reduce industrial carbon dioxide emissions played a role in the contraction of industrial activity, analysts said, adding that the fall in factory activity was still within a reasonable range.

The NBS announced that the official PMI in October retreated to 49.2, down 0.4 points from the previous month, reflecting waning industrial activity caused by serious electricity supply shortages.  

The PMI fluctuating slightly above or below the 50-point mark is within the normal range, indicating the economy is stable, Dong Dengxin, director of the Finance and Securities Institute of Wuhan University, told the Global Times on Sunday. 

Dong stressed that the surging prices of raw materials and bulk commodities are a global issue. This reflects the ongoing COVID-19 pandemic, the rising risk of US inflationary pressure and the depreciation of the US dollar, since many bulk commodities, such as crude oil, are priced in US dollar.  

Electricity shortages are partly a seasonal factor that can be resolved, Dong said.

The further industrial slowdown in both demand and supply indicates weakened manufacturing production and market demand in October, with consumption in many sectors, including textiles and non-metallic mineral products, posting a reading below 45, according to Zhao Qinghe, a senior analyst from the NBS.

Jin Xiaobo, CEO of Zhejiang Kaierhai Textile Garments Co, which is based in Shaoxing, East China's Zhejiang Province, told the Global Times on Sunday that his company's production has been affected because upstream enterprises such as those in the textile and dyeing segments are raising their prices and cannot make reliable deliveries.

Demand is weak while prices keep rising, especially those for raw materials and the wholesale prices of manufactured products. Factory gate prices reached their highest levels in October in recent years. 

A manager surnamed Huang from Guangdong Eagle Gifts Co told the Global Times that purchasing costs have increased by around 10 percent. 

Nevertheless, the high-tech manufacturing sector kept growing in October, and China's imports and exports also kept picking up in September and October. 

The non-manufacturing PMI, from sectors less reliant on energy and materials, fell 0.8 points to 52.4, and the composite PMI output index was 50.8 in October. 

Global Times