BEIJING, (Reuters) – China’s manufacturing activity may have slowed in November as power cut and supply snags eased. However, a Reuters poll revealed that China’s persistent weakening in the sector of the manufacturing industry points to a slowing economy.

According to the median prediction of 29 economists polled on Monday by Reuters, the official manufacturing Purchasing Manager’s Index is forecast to increase to 49.6 in November from 49.2 last October. If the reading is below 50, it means there was a decrease in activity from the prior month.

Analysts believe the post-holiday rebound in production and the reduction in power cuts throughout most of the nation explains the contraction. But factors such as rising raw material prices and slowdowns within the property industry and supply shortages will continue to hinder recovery.

Jian Chang is chief China economist. He stated, “We expect that the NBS manufacturing PMI will stay in contraction territory in November at 49.6 versus 49.2 before.” Barclays In a Friday note, (LON)

Although the world’s second largest economy has shown an impressive recovery from the pandemic slump last year, it is now struggling with slowing growth in its manufacturing sector and debt issues in the real estate market. According to analysts, fourth-quarter gross domestic product (GDP), growth will slow down further.

After policymakers took action to reduce record-high coal prices, power cuts were lessened. On Nov. 7, the State Grid Corporation stated that all power rationing had ended across most of the country, with some exceptions for certain high-emissions industries and temporary restrictions in certain provinces.

Last week, Premier Li Keqiang acknowledged the fact that China’s economy is facing new downward pressures. However, he said authorities must avoid an aggressive one-size fits all approach.

China’s central banking will likely be prudent in loosening its monetary policy, sources say. This is because slowing economic growth, high inflation, and rising factory prices raise concern about stagflation.

The factory gate inflation reached an all-time high of 26 years in October. It further squeezed producers’ profit margins, and increased stagflation worries.

The PMI official, which is largely focused on state-owned and large companies, and the sister survey about services will both be available on Tuesday.

This Wednesday will see the publication of private Caixin manufacturing PMI. Analysts anticipate that the headline reading will fall slightly from 50.6 to 50.5 in May.