Excerpt
Core ideas
The official manufacturing PMI in December was 50.3%, up 0.2 percentage points, and the non-manufacturing PMI was 52.7%, up 0.4 percentage points. There are the following concerns: first, the supply constraint is alleviated, the demand is still insufficient, and the "new order-finished product inventory" is weakening; second, the price of raw materials continues to fall, and the pressure on manufacturing costs tends to ease; third, at the industry level, the intermediate goods and consumer boom have rebounded, and the trend of clothing/railway ships/automobiles has improved; fourth, the stage of rapid economic repair has not yet arrived. Monetary policy is still in the window period in the first quarter of next year, interest rate cuts are expected to land before the two sessions, and there is still room for reducing the RRR to cooperate with fiscal bond issuance; the short-term focus of the fiscal is that the special debt cohesion drives the infrastructure to move forward, and the real estate demand policy may still be adjusted.
Supply constraints have eased and demand is still insufficient
In December, the production index was 51.4%, down 0.6 percentage points, and the new order index was 49.7%, up 0.3 percentage points. In December, the raw material inventory index was 49.2%, up 1.5 percentage points, and the finished product inventory index was 48.5%, up 0.6 percentage points. The main reason for the expansion of production is the lifting of energy constraints and the correction of supervision such as energy consumption, while the automotive industry chain is slowly improving with the supply of chips; on the demand side, new orders have rebounded month-on-month but are still in the contraction range, and the main contradiction of the economy has shifted from supply constraints to insufficient demand. Raw material replenishment inventory is due to the shortage of supply and the decline in cost pressure, and the recovery of production has led to rigid replenishment. The economic momentum index reflected in the "new orders - finished product inventory" is weakening, and the manufacturing industry is in the stage of passive inventory replenishment.
The exit enters the roofing phase
The index of new export orders in December was 48.1%, down 0.4 percentage points. In the case that the demand for european and American commodities has not weakened significantly, the new export orders below the boom-bust line mainly reflect the restriction of shipping bottlenecks and the willingness of upstream prices to dock orders. From the perspective of the export chain, the production of furniture, communications and electronics and other industries has weakened compared with the previous highs, but the inventory is still accumulating, and the characteristics of passive replenishment of inventory are obvious. With the Christmas shopping season passing, the direction of export decline is basically clear. In terms of rhythm, the speed of switching from U.S. commodity consumption to service consumption under the disturbance of Omicron strain is still gradual, the actual inventory in the United States is at a low level to support the demand for replenishment, and the recent freight rate index continues to rise, which means that exports from the end of the year to the beginning of next year are still in the peaking stage, or show a moderate downward trend. After the second half of next year, the export growth rate may face a relatively larger decline.
Cost pressures tend to ease
In December, the raw material purchase price index was 48.1%, down 4.8 percentage points; the ex-factory price index was 45.5%, down 3.4 percentage points. It is speculated that the PPI will fall back to about 11% year-on-year in December. Energy prices have fallen sharply since December, with oil prices falling mainly due to risk aversion caused by the Omicron strain, which hit global border liberalization and recovery expectations. Under the supply guarantee policy, the inventory rose to a high level in the same period of history, and the price continued to fall. The black rebound system is the central economic work conference "moderately advanced infrastructure" and "promote the virtuous cycle of the real estate industry" to boost market sentiment. Commodity prices as a whole still tend to fall, the domestic PPI-CPI scissors difference is expected to converge faster, the cost pressure of the middle and downstream manufacturing industry may tend to ease, and the enterprises with large external supply and demand exposure risks are still facing supply chain pressure.
The construction industry is waiting for infrastructure to take force
In December, the construction industry PMI fell 2.8 percentage points to 56.3%, the housing construction industry fell 3.9 percentage points month-on-month to 54.9%, and the civil construction industry fell 1.4 percentage points month-on-month to 59.1%. One is that the construction industry is affected by the cooling of the cold wave and the approaching of the "two festivals", and the second is that real estate investment is still slowing down and infrastructure is still in the stage of accumulating power. The probability of speeding up infrastructure investment early next year is high: First, the Central Economic Work Conference requires that the policy force be appropriately advanced and the fiscal department should speed up the progress of expenditure; second, this year's special bonds will be issued later, and the physical workload may be concentrated in early next year; third, the issuance of special bonds in advance next year and the efficiency of investment are expected to be improved; fourth, investment mobilization meetings will be held in many places at the end of the year. It will take time for real estate policy to reach the bottom of the industry, and real estate investment in the first half of next year will still weaken, but the risk of hard landing will be reduced. How to develop and operate after the city invests in land is worth paying attention to.
Risk warning: Exports fell back more than expected, and the domestic epidemic spread.
Official PMI review for December 2021
The official manufacturing PMI in December was 50.3%, up 0.2 percentage points, below market expectations (Wind's consensus estimate was 50.5%), and the non-manufacturing PMI was 52.7%, up 0.4 percentage points. The main concerns are as follows:
(1) Manufacturing production and new orders are on the dry line, reflecting the easing of supply constraints, demand is still insufficient, the economic momentum index reflected in the "new orders - finished product inventory" is weak, and the manufacturing industry is in the stage of passive inventory replenishment;
(2) Raw material prices continue to fall, and the cost pressure of manufacturing tends to ease, but the supply chain pressure of enterprises with large external exposure risks is still large;
(3) At the industry level, the trend of intermediate goods and consumer goods has rebounded, and the trend of clothing/railway ships/automobiles has improved;
(4) The worst point of the economy has passed (September 21), but the phase of rapid recovery has not yet arrived (expected in the second quarter of 2022). Monetary policy is still in the window in the first quarter of next year. Considering that the economic growth rate is lower than the potential output growth rate, and it is still necessary to stabilize the demand for real estate, the interest rate cut is expected to land before the two sessions, and there is still room for the reduction of the RRR to cooperate with the fiscal bond issuance; the short-term focus of the fiscal policy is that the special debt concentrates on the infrastructure construction, the real estate demand policy may still be adjusted, and in terms of industry, carbon emission reduction, new infrastructure, urban renewal and affordable housing and other investment is the focus, and the specialized new enterprises are favored by the policy.
On the production side, the production index in December was 51.4%, down 0.6 percentage points, but still maintained expansion. The main reason is still the lifting of energy constraints and the correction of energy consumption and other regulatory deviations, manufacturing production continued to repair from the production restriction pit in September and October, while the automotive industry chain slowly improved with chip supply. Among them, the production of pharmaceuticals, general equipment, ferrous metals and other industries has accelerated significantly, corresponding to the repeated epidemics, the high prosperity of manufacturing investment and the expected improvement of infrastructure. The production index of textile, petroleum and coal and other industries fell below the critical point, the former was greatly affected by the epidemic in Jiangsu and Zhejiang, and the latter was related to the sharp decline in prices to inhibit production enthusiasm.
On the demand side, the new order index in December was 49.7%, up 0.3 percentage points, but it is still in the contraction range, and the main contradiction in the economy has shifted from supply constraints to insufficient demand. Among them, the new order boom in the pharmaceutical, automotive, communication and electronics industries is relatively high. The high supply and demand of the pharmaceutical industry are relatively matched, and the car declines by 30% due to the subsidy for new energy vehicles in 2022, stimulating the demand for car purchases at the end of the year.
On the inventory side, the raw material inventory index in December was 49.2%, up 1.5 percentage points, and the finished product inventory index was 48.5%, up 0.6 percentage points. Raw material replenishment inventory is due to the shortage of supply and the decline in cost pressure, and the recovery of production has led to rigid replenishment. The economic momentum index reflected in the "new orders - finished product inventory" is weakening, and the manufacturing industry is in the stage of passive inventory replenishment.
According to the data of the central procurement, the intermediate products and consumer categories of the manufacturing PMI category rebounded in the month, and the raw materials and equipment categories fell back. In the subdivision industry, the leading industries in prosperity are papermaking, automobiles, computers, and medicine, the industries with a large improvement rate are medicine, papermaking, and wood, and the leading industries that have improved in the past 3 months are clothing, railway ships, and automobiles; in the non-manufacturing industry, the transportation and postal industry, information service industry, accommodation and catering industry have rebounded, and the construction industry, wholesale and retail industry has declined.
The index of new export orders in December was 48.1%, down 0.4 percentage points. In the case that the demand for european and American commodities has not weakened significantly, the new export orders below the boom-bust line mainly reflect the constraints of shipping bottlenecks and the willingness of upstream prices to dock orders. From the perspective of the export chain, the production of furniture, communications and electronics and other industries has weakened compared with the previous highs, but the inventory is still accumulating, and the characteristics of passive replenishment of inventory are obvious. With the Christmas shopping season passing, the direction of export decline is basically clear. In terms of rhythm, the speed of switching from U.S. commodity consumption to service consumption under the disturbance of Omicron strain is still gradual, the actual inventory in the United States is at a low level to support the demand for replenishment, and the recent freight rate index continues to rise, which means that exports from the end of the year to the beginning of next year are still in the peaking stage, or show a moderate downward trend. After the second half of next year, the overdraft effect of advanced consumption of durable goods will gradually appear, the decline in US commodity consumption may accelerate, the replenishment of inventory is over, the transportation bottleneck is expected to ease, and the export growth rate may face a relatively larger decline.
In December, the raw material purchase price index was 48.1%, down 4.8 percentage points; the ex-factory price index was 45.5%, down 3.4 percentage points. It is speculated that the PPI will fall back to about 11% year-on-year in December. High-frequency data shows that energy prices have fallen sharply since December, and ferrous metals have rebounded slightly. Among them, the decline in oil prices is mainly due to the risk aversion caused by the Omicron strain, the impact on global border liberalization and recovery expectations, and the recent rapid growth of the epidemic in europe, the United States, South Africa and other places. Under the supply guarantee policy, the inventory rose to a high level in the same period of history, and the price continued to fall. The black rebound system is the central economic work conference "moderately advanced infrastructure" and "promote the virtuous cycle of the real estate industry" to boost market sentiment. Although the performance of varieties is differentiated, but in the global liquidity convergence trend, commodity prices as a whole still tend to fall, the domestic PPI-CPI scissors difference is expected to converge faster, the cost pressure of the middle and downstream manufacturing industry may tend to ease, but the enterprises with large external supply and demand exposure risks are still facing supply chain pressure.
Demand in the services sector is not expected to be good
In December, the PMI of the service industry rebounded by 0.9 percentage points to 52%, of which the PMI of the consumer service industry rose by 3 percentage points to 51% month-on-month, and the PMI of the productive service industry fell by 0.1 percentage points to 57.5% month-on-month. Aviation, accommodation, catering and entertainment and other industries that were greatly affected by the epidemic last month improved significantly, which is related to the low base of the month- Telecommunications, finance and other industries that have been little affected by the epidemic have remained in the high boom range of more than 60%. The real estate boom is still low and down month-on-month. Due to the recurrence of the domestic epidemic and the poor demand expectations of the service industry, the new order index was 48.2%, which was below the critical point for 7 consecutive months, and the business expectation index fell by 1.3 percentage points month-on-month, the second lowest value in the year.
In December, the construction industry PMI fell 2.8 percentage points to 56.3%, weaker than seasonal, of which the housing construction industry fell 3.9 percentage points month-on-month to 54.9%, and the civil construction industry fell 1.4 percentage points month-on-month to 59.1%. On the one hand, the Bureau of Statistics explained that the construction industry activity is affected by factors such as the cooling weather of the cold wave and the approaching of the "two festivals", on the other hand, real estate investment has not yet reversed the slowdown trend, and infrastructure is still in the stage of accumulating strength. Looking ahead, the probability of infrastructure investment accelerating early next year is high. First, the Central Economic Work Conference requires that the policy force be appropriately advanced and the fiscal progress of expenditure be accelerated; second, this year's special bonds will be issued later, and the physical workload may be concentrated on cashing in early next year; third, the allocation of special bonds (1.46 trillion yuan) approved in advance next year will be based on project demand, and the issuance and investment efficiency is expected to increase; fourth, investment mobilization meetings will be held in many places at the end of the year. It will take time for the real estate policy to reach the bottom of the industry, at least to see the housing price stabilize. Real estate investment may still weaken in the first half of next year, but the risk of hard landing is reduced. Under the proposal of supporting reasonable housing demand and promoting a virtuous circle, short-term policies should reverse negative market expectations, and urge real estate sales and development to return to a reasonable positive growth rate, and demand policies may be adjusted in the first quarter. In the long run, we must develop a new model, and how to develop and operate after the city invests in land is worth paying attention to.
PMI data at a glance
Risk Warning
1, exports fell more than expected: the peak season of overseas holiday consumption has passed, and the pace of decline in commodity demand is still uncertain.
2. Spread of the domestic epidemic: Factors such as winter climate and crowd flow have led to great pressure on epidemic prevention, and Omicron strains also have the risk of importation.
This article originated from huatai fixed income strong debt forum