NEW YORK: 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 (PMI) declined to 49.6 from 50.1 in August, the National Bureau of Statistics (NBS) said yesterday, below the 50-mark that signals a decline in output.

       The non-manufacturing gauge, which measures activity in construction and services sectors, improved to 53.2, well above the consensus forecast of 49.8.

       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 contraction was due to factors including a sluggish performance of energy-intensive industries, Zhao Qinghe, a senior statistician at the NBS, said in a statement. The new orders sub-index has contracted for two straight months now, “reflecting a slowdown in manufacturing production activity and market demand,” he said.

       Separately, the Caixin manufacturing PMI, a private gauge of output, rebounded to 50 from 49.2 in August.

       The electricity shock added to a slew of headwinds already hitting the economy: the property market is under stress with China Evergrande Group facing a 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.

       “The supply disruption is quite widespread,” Cui Li, head of macro research at CCB International Securities Ltd, said in an interview on Bloomberg TV. “It’s probably going to be a continued issue in coming months.”

       Bonds and the yuan were little changed given the data’s mixed signals about manufacturing and services activity. China’s benchmark CSI 300 Index rose as much as 0.8%, with all sectors up except financials. ― Bloomberg