BEIJING, (Reuters) – China’s factory activity grew at an unprecedented pace over the past four months, buoyed in part by higher demand. However, power scarcity and rising prices weighed down on production, according to a Monday business survey.

Caixin/Markit Manufacturing Purchasing Management Index (PMI), rose to 50.6 in Oct — the highest point since June. According to Reuters, economists expected that the index would remain at 50.0 in October as it was in September. On a monthly basis, the 50-mark distinguishes between growth and contraction.

China’s economy slows after a remarkable recovery from the pandemic-driven slump that began early last year. The country’s sprawling manufacturing sector was hit hard by COVID-19 epidemics, increased costs and, more recently, power shortages.

Due to a lack of coal and tougher emission standards combined with strong industrial demand, a power crisis has seen widespread restrictions on electricity consumption, which in turn, have affected factory output.

An output sub-index revealed that production declined for the third consecutive monthly period, at a slower rate than September.

A Sunday survey by the Chinese government showed that China’s factories activity declined more in October than was expected, and it is now at its lowest point for two months.

Caixin, which is a survey that focuses only on small export-oriented businesses in coastal areas, found domestic demand to have increased as local COVID-19 case numbers dwindled. However, foreign demand for these products remained slow as other pandemics continued.

While the sub-index to new orders rose to 51.4 in September from 50.8, new export orders declined for the third month straight.

The manufacturing sector saw a slight improvement in October compared to the prior month. Wang Zhe from Caixin Insight Group, senior economist said that the downward pressure on economic growth has continued.

Supply strains were the main factor that impacted the economy. Soaring commodity prices and shortages of raw materials, coupled with problems in electricity supplies, caused severe constraints to manufacturers, causing disruptions to supply chains.

According to the survey, input prices increased at the fastest rate since December 2016. This was partly due to rising energy costs and transportation costs. However, factories saw a third consecutive month of job cuts, though at a slower pace, than September.

China’s Cabinet announced Wednesday that it will delay some taxes to manufacturers in order to help them. This is effective for the three-month period beginning November.

According to Reuters, China’s growth in economics is expected to be 5.5% instead of the 8.2% that was predicted. Comparable to a year ago, the economy grew by 9.8% over three quarters in 2021.

Wang, Caixin Insight group warned that the new wave of COVID-19 epidemics occurring in central and western areas since October may cause a serious economic downturn.

Wang said, “It is crucial to balance both the goals of controlling outbreaks and maintaining normal economy activity.”