Factory activity in China plunged more than expected in October, official data showed Sunday, suggesting the industrial sector continued struggling as it grappled with tight power supply and surging raw material costs.

The key Purchasing Managers' Index (PMI) -- a gauge of manufacturing activity in the world's second-largest economy -- fell to 49.2 this month, down from 49.6 in September, said the National Bureau of Statistics (NBS).

Also Read |&nbsp;<a href="https://www.wionews.com/south-asia/fertiliser-shipment-row-chinese-embassy-blacklists-peoples-bank-of-sri-lanka-424943">Fertiliser shipment row: Chinese embassy blacklists People’s Bank of Sri Lanka</a>

This marks the second straight month in which China's PMI dipped below the 50-point mark separating growth from contraction.

A Bloomberg poll of economists had pegged the reading at 49.7, which would have been a slight improvement.

Although the country's PMI contracted when the spread of COVID-19 -- which first surfaced in the central city of Wuhan -- forced most business activity to a halt, life has largely returned to normal as strict measures brought the outbreak under control.

But the NBS said Sunday: "In October, due to factors such as still-tight power supply and the high costs of some raw materials, the manufacturing PMI fell."

Both the production and new-order indexes were in contraction, pointing to weakening supply and demand, senior statistician Zhao Qinghe said in a statement.

Meanwhile, the price index continued rising, reflecting higher purchase prices of raw materials such as petroleum and coal, and that of sales costs.

Also Read |&nbsp;<a href="https://www.wionews.com/world/due-to-fuel-shortages-china-rations-diesel-424700">Due to fuel shortages, China rations diesel</a>&nbsp;

The production index has fallen to among its lowest levels since 2005, said Pinpoint Asset Management chief economist Zhiwei Zhang -- warning of stagflation.

"A worrying sign is the passthrough of inflation from input prices," he said, adding this could pile pressure on consumer inflation.

Tommy Xie of OCBC Bank told AFP that smaller companies appear to be "paying the price for the power shortages", suggesting the need for more policy support.

Non-manufacturing activity fell in October also, official data showed, as authorities noted "the recovery of the service industry has slowed".

China's non-manufacturing PMI came in at 52.4, down from 53.2 in September.

While the reading still indicates expansion, helped by holiday activity in early October, the NBS said the threat of local outbreaks continued to cast a pall over consumer sentiment.

"The real situation could be worse," said Nomura chief China economist Lu Ting, noting that surveys may not reflect the impact of escalating anti-virus measures in late October.

"We expect another round of cuts of growth forecasts," Lu added.

Factory activity in China plunged more than expected in October, official data showed Sunday, suggesting the industrial sector continued struggling as it grappled with tight power supply and surging raw material costs.

Factory activity in China plunged more than expected in October, official data showed Sunday, suggesting the industrial sector continued struggling as it grappled with tight power supply and surging raw material costs. The key Purchasing Managers' Index (PMI) -- a gauge of manufacturing activity in the world's second-largest economy -- fell to 49.2 this month, down from 49.6 in September, said the National Bureau of Statistics (NBS). Also Read | Fertiliser shipment row: Chinese embassy blacklists People’s Bank of Sri Lanka This marks the second straight month in which China's PMI dipped below the 50-point mark separating growth from contraction. A Bloomberg poll of economists had pegged the reading at 49.7, which would have been a slight improvement. Although the country's PMI contracted when the spread of COVID-19 -- which first surfaced in the central city of Wuhan -- forced most business activity to a halt, life has largely returned to normal as strict measures brought the outbreak under control. But the NBS said Sunday: "In October, due to factors such as still-tight power supply and the high costs of some raw materials, the manufacturing PMI fell." Both the production and new-order indexes were in contraction, pointing to weakening supply and demand, senior statistician Zhao Qinghe said in a statement. Meanwhile, the price index continued rising, reflecting higher purchase prices of raw materials such as petroleum and coal, and that of sales costs. Also Read | Due to fuel shortages, China rations diesel The production index has fallen to among its lowest levels since 2005, said Pinpoint Asset Management chief economist Zhiwei Zhang -- warning of stagflation. "A worrying sign is the passthrough of inflation from input prices," he said, adding this could pile pressure on consumer inflation. Tommy Xie of OCBC Bank told AFP that smaller companies appear to be "paying the price for the power shortages", suggesting the need for more policy support. Non-manufacturing activity fell in October also, official data showed, as authorities noted "the recovery of the service industry has slowed". China's non-manufacturing PMI came in at 52.4, down from 53.2 in September. While the reading still indicates expansion, helped by holiday activity in early October, the NBS said the threat of local outbreaks continued to cast a pall over consumer sentiment. "The real situation could be worse," said Nomura chief China economist Lu Ting, noting that surveys may not reflect the impact of escalating anti-virus measures in late October. "We expect another round of cuts of growth forecasts," Lu added.

China factory activity slumps further on energy woes

The British pound slumped to a fresh three-year low against the euro Monday and edged lower on the dollar, as signs of weakness mounted in the British economy. 
 
At 86.80 pence on the euro, the pound was at its weakest level since August 2013. 
 
Meanwhile sterling fell to $1.2883, just barely above its $1.2798 post-Brexit vote level that marked a three-decade low against the US greenback. 
 
The currency&#39;s fall came as data from Britain showed London residential rents fell for the first time in six years in July, amid worries the June 23 vote to exit the European Union was already having an impact on the economy. 
 
The rental data came on the heels of numbers showing home prices fell for the second straight month. 
 
&quot;In the month of August, the British pound has been the weakest currency and the trend continued today,&quot; said Kathy Lien of BK Asset Management. 
 
&quot;The main reason why the currency is weak is because investors are worried about this week&#39;s UK economic reports.&quot; 
 
Even if the formal moves to leave the European Union will not be taken by the government until next year, Lien said, &quot;the damage has been done and consequences are just beginning to appear.&quot; 
 
2100 GMT Monday Friday 
 
EUR/USD 1.1183 1.1165 
 
EUR/JPY 113.23 113.07 
 
EUR/CHF 1.0877 1.0882 
 
EUR/GBP 0.8680 0.8643 
 
USD/JPY 101.25 101.27 
 
USD/CHF 0.9726 0.9747 
 
GBP/USD 1.2883 1.2918

The currency's fall comes as data showed London residential rents fell for the first time in six years in July

The British pound slumped to a fresh three-year low against the euro Monday and edged lower on the dollar, as signs of weakness mounted in the British economy. At 86.80 pence on the euro, the pound was at its weakest level since August 2013. Meanwhile sterling fell to $1.2883, just barely above its $1.2798 post-Brexit vote level that marked a three-decade low against the US greenback. The currency's fall came as data from Britain showed London residential rents fell for the first time in six years in July, amid worries the June 23 vote to exit the European Union was already having an impact on the economy. The rental data came on the heels of numbers showing home prices fell for the second straight month. "In the month of August, the British pound has been the weakest currency and the trend continued today," said Kathy Lien of BK Asset Management. "The main reason why the currency is weak is because investors are worried about this week's UK economic reports." Even if the formal moves to leave the European Union will not be taken by the government until next year, Lien said, "the damage has been done and consequences are just beginning to appear." 2100 GMT Monday Friday EUR/USD 1.1183 1.1165 EUR/JPY 113.23 113.07 EUR/CHF 1.0877 1.0882 EUR/GBP 0.8680 0.8643 USD/JPY 101.25 101.27 USD/CHF 0.9726 0.9747 GBP/USD 1.2883 1.2918

British Pound slumps to three-year low against Euro

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