The Strategist

Energy crisis causes drop in Chinese industrial production index

10/01/2021 - 06:18

China's National Bureau of Statistics reported that the country's business activity index (PMI) for the manufacturing sector was 49.6 points in September, down from 50.1 points in August.

A reading below 50 points indicates a slowdown in business activity. The decline in September's manufacturing PMI was unexpected: analysts polled by Bloomberg had expected it to be 50 points.

The decline in China's industrial production index was the first in 18 months. Analysts attribute this situation to problems in the energy industry: rising electricity prices and shortages of industrial raw materials. 

This is confirmed by the fact that the index of business activity in the non-manufacturing sector, mainly the service market, which is less dependent on energy prices, rose in September to 53.2 points.

"In September, the manufacturing business activity index was below the threshold due to weak market sentiment in energy-intensive industries," said a senior specialist at the National Bureau of Statistics, "When it comes to market expectations for the near term, businesses are more optimistic due to the recovery in the service market".