BEIJING (REUTERS) – China’s factory activity unexpectedly contracted in September as high raw material prices and power cuts continued to pressure manufacturers in the world’s second-largest 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 (Sept 30), slipping into contraction for the first time since February 2020.

Analysts in a Reuters poll had expected the index to remain steady at 50.1, unchanged from the previous month.

The 50-point mark separates growth from contraction.

China’s economy rapidly recovered from a pandemic-induced slump last year, but momentum has weakened in recent months, with the vast manufacturing sector facing Covid-19 outbreaks, heightened costs, production bottlenecks, and more recently, electricity rationing.

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