China’s Factories Contract For First Time Since Pandemic Began

• China’s factory activity contracted in September for the first time since the pandemic began last year, a sign of the damage a widespread electricity crunch is having on an already slowing economy. 
• The official manufacturing purchasing managers’ index declined to 49.6 from 50.1 in August, the National Bureau of Statistics said Thursday, below the 50 median estimate in a Bloomberg survey of economists. Readings below the 50-mark signal a contraction in output. 
• China is facing a widespread power crunch that threatens to slow economic growth and disrupt global supply chains just ahead of the year-end Christmas shopping season. At least 20 provinces have restricted electricity use in September, curbing factory production on everything from aluminum and steel to toys and clothing. 
• The electricity shock adds to a slew of headwinds already hitting the economy: the financial system is under stress because of China Evergrande Group’s debt crisis; high commodity prices have squeezed industrial profits; the government has cracked down on industries from property to the internet; and consumer spending remains weak due to virus outbreaks.

(Source: Bloomberg)