On the morning of November 15, the Bureau of Statistics released the main macro data for October.
First, from the production side
On the one hand, industrial production has rebounded.
In October, the year-on-year growth rate of industrial added value rebounded from 3.1% to 3.5%, the two-year average growth rate rebounded from 5.0% to 5.2%, and the month-on-month growth rate rebounded from 0.05% to 0.39%.
Prior to that, the production index in the official manufacturing PMI fell 1.1 percentage points to 48.4% in October, below the boom-bust line for the second consecutive month. The market expects industrial production to continue to slow down, but the actual results exceed market expectations.
Among the three major categories, the government stepped up efforts to ensure supply and stabilize prices, and the growth rate of the mining industry rebounded from 3.2% to 6.0%, reaching the highest level in the year, while the shortage of electricity pushed the production and supply of electricity, gas and water from 9.7% to 11.1%. At the same time, the year-on-year growth rate of manufacturing value added rebounded from 2.4% to 2.5%.
The recovery in manufacturing value added indicates, on the one hand, that the lack of electricity improved in October, and on the other hand, it is driven by the resilience of external demand. The two-year average growth rate of export delivery value in October rebounded from 7.0% to 7.8%, reaching the highest level since May, which in turn accelerated the manufacturing market.
On the other hand, service sector production resumed.
The index of services production fell from 5.2% to 3.8% in October, but the average growth rate in the two years accelerated from 5.3% to 5.5%.
In October, the average daily new confirmed cases in the local area dropped from 18.5 cases last month to 15.9 cases, and the average daily new case increased from 898 cases to 1387 cases, but the time was mainly concentrated in the second half of the month, and the region was mainly concentrated in the northeast, northwest and other provinces, so the impact on the overall service industry in the country was not significant.
Second, from the demand side
First, consumption improved more than expected.
In October, the growth rate of total retail sales of consumer goods rebounded by 4.9% year-on-year from 4.4%, and the average growth rate of the two years rebounded from 3.8% to 4.6%. The month-on-month growth rate rebounded from 0.3% to 0.43%.
Consumption improved more than expected in October, first of all related to higher retail prices. The Retail Price Index (RPI) rose to 2.9% in October from 1.8%, the highest since March last year. Excluding price factors, real retail sales growth fell back to 1.9 percent from 2.5 percent last month.
Second, it is related to the improvement of employment and income. Due to the strengthening of the export industry chain, it will drive employment and income growth, and help consumption remain stable. From January to October, 11.33 million new jobs were created in cities and towns across the country, completing the annual target task ahead of schedule. The national urban survey unemployment rate was 4.9 percent in October, unchanged from the previous month. The surveyed unemployment rate for 16-24 years old was 14.2 per cent, down 0.4 percentage points from the previous month.
Finally, it has little to do with the impact of the epidemic. In October, the year-on-year growth rate of catering revenue fell from 3.1% to 2.0%, and the two-year average growth rate rebounded from 0.8% to 1.1%. At the same time, online sales are still hot, from January to October, online retail sales of physical goods increased by 14.6%, down 0.6 percentage points from January to September, accounting for a slight increase from 23.6% to 23.7%.
Second, the growth rate of investment remained stable.
From January to October, the growth rate of fixed asset investment fell from 7.3% to 6.1%, and the average growth rate in two years was flat at 3.8%. Considering that the price of PPI has reached a new high this year, the role of price factors cannot be ignored.
Judging from the average growth rate of the two years, infrastructure investment in the three pillars is generally stable, the growth rate of manufacturing investment has rebounded, and real estate development investment is still falling.
First, the growth rate of infrastructure investment in the first 10 months fell from 1.5% to 1.0%, and the average growth rate of the two years fell slightly from 0.4% to 0.3%. The two-year average growth rate of infrastructure investment in October rebounded from -1.8% to 0.9%, an improvement.
In terms of funds, from the perspective of wind caliber, the new local government bonds in October were 689.3 billion yuan, the highest level in the year, and the Ministry of Finance required special bonds to be issued before the end of November.
In terms of projects, Vice Premier Liu He previously asked for "moderate advance infrastructure construction", and the National Development and Reform Commission also said that it will give full play to the traction and driving role of 102 major engineering projects in the "Outline" of the "14th Five-Year Plan", make solid preparations for the project, accelerate the implementation of the investment plan within the central budget, and increase the promotion of project construction.
Coupled with the repeated emphasis of the National Standing Committee on increasing cross-cyclical adjustment efforts to "cope with the new downward pressure on the economy" and "keep the economy operating in a reasonable range", the role of infrastructure investment in supporting growth will gradually appear.
Second, manufacturing investment fell from 14.8% to 14.2% in the first 10 months, and the average growth rate of the two years rebounded from 3.3% to 3.8%. In October, the average growth rate of the two-year average rebounded from 6.4% to 6.9%.
The growth rate of manufacturing investment has regained its growth momentum, first, because manufacturing profits still maintain rapid growth. In the first nine months of this year, the profit realized by the manufacturing industry increased by 42.9% year-on-year, and the operating income margin was 6.58%, and the overall situation remained stable.
Second, the impact of the state's policies such as "guiding enterprises to increase investment in technological transformation and strengthening scientific and technological innovation and the resilience of the industrial chain supply chain", investment in technological transformation and investment in high-tech manufacturing has grown rapidly. From January to October, investment in high-tech manufacturing increased by an average of 16.5% in two years, continuing to play a traction role.
Third, because exports are still resilient. In the near future, whether it is the value of export deliveries or the total exports, the average growth rate of the two years has maintained a rebound momentum. In the context of the poor operation of the global industrial chain, Chinese products are marketed in the world, and manufacturing companies have the willingness to expand investment.
Third, the growth rate of real estate development investment in the first 10 months fell from 8.8% to 7.2%, the average growth rate of the two years fell from 7.2% to 6.8%, and the average growth rate of the two years in October fell from 4.0% to 3.3%, the seventh consecutive month of decline.
Since October, regulators have continued to correct the real estate regulation, but the implementation is still weak, the risk appetite of market participants for real estate has dropped to a very low level, the financing end is basically frozen, the sales collection is trapped in the regulatory account, the supplier refuses to advance, the consumer wait-and-see mood is aggravated, and the joint action of all aspects has led to a certain run on the housing enterprises, and more and more real estate developers have cash flow problems.
From the sales point of view, from January to October, the average growth rate of commercial housing sales area in two years fell from 4.6% to 3.6%, and the average growth rate of sales in two years fell from 10.0% to 8.8%, and the market continued to cool. In addition, affected by funds and expectations, housing enterprises are not willing to take land and develop. From January to October, the average growth rate of the completed area in two years fell from 4.5% to 2.8%, the growth rate of construction area fell from 5.5% to 5.0%, and the area of new construction fell from -3.9% to -5.2%.
Finally, exports were better than expected.
In October, the year-on-year growth rate of exports in US dollar terms fell from 28.1% to 27.1%, but the two-year compound growth rate rebounded from 18.4% to 18.7%, better than market expectations.
Exports in October exceeded expectations year-on-year, mainly driven by three factors: First, price factors. The export price index rose 10.7% year-on-year in September, the highest growth rate in nearly 10 years. Export prices continued to rise in October and are expected to continue to push total exports higher.
Second, demand has rebounded. In October, the global manufacturing PMI rebounded by 0.2 percentage points to 54.3%, indicating that global demand has rebounded, especially in Europe and the United States, Christmas stocks have driven China's exports to strengthen.
The third is the order transfer factor. Production and exports of Southeast Asian economies affected by the pandemic have not yet returned to normal, and their orders continue to shift to China.
Third, the next stage of the outlook
Judging from the main macro data in October, the economy mainly shows the following characteristics:
First, the export industry chain remains strong and resilient, which in turn drives industrial added value, manufacturing investment and employment to go well; second, although the epidemic has heated up, it mainly affects the northeast and northwest regions, and has little impact on the national service industry and consumption; third, the real estate market continues to cool, housing prices are low, sales are weak, and regulation needs to be further corrected.
Correspondingly, the factors that determine the economic trend in the next stage are also concentrated in these aspects:
The first is the intensity of external demand. The recent signs of stabilization in the global economy mainly reflect the positive trend of the epidemic in the previous months. However, as the epidemic in Europe has rebounded since the beginning of winter, some countries are considering re-tightening epidemic prevention measures, and the stimulus policies of various countries are withdrawing, which may lead to another weakening of the global economy. For Chinese exports, the window of time for continued resilience is narrowing.
The second is epidemic prevention and control. Since November, as the weather has turned colder, the virus activity has begun to be active, and the domestic epidemic situation has shown a multi-point sporadic state, which has now spread to more than 20 provinces, and the number of new close contacts has increased significantly compared with previous months.
Considering that the Winter Olympics will be held in early February next year, the epidemic prevention and control in various places will continue to increase before then, the economy may continue to be disturbed, and it is difficult for consumption and service industries to rebound significantly.
The third is real estate regulation. Since October, regulators have continuously corrected deviations in real estate financial policies, but the effect has not yet appeared. In October, the price index of newly built commodity housing in 70 cities across the country fell by 0.3% month-on-month, and the decline rate increased from the previous month.
In recent times, there have been signs of slowing down in regulation and control, and the capital market has taken the lead in responding, but it is expected that the positioning of "housing and not speculation" and the policy tone of "three stability" will not change, and in the context of the psychological drive of "buying up and not buying down" and the accelerated launch of real estate tax pilots, it is expected to be difficult to reverse the downward trend of the real estate market.