The manufacturing PMI in November is still in the contraction range, and the foundation for the recovery still needs to be consolidated
On November 30, the National Bureau of Statistics released data that in November, the manufacturing purchasing managers' index (PMI) was 49.4%, down 0.1 percentage points from the previous month, and the level of manufacturing prosperity fell slightly.
In November, the non-manufacturing business activity index was 50.2%, down 0.4 percentage points from the previous month, still above the critical point, and the non-manufacturing industry continued to expand.
In November, the composite PMI output index was 50.4%, down 0.3 percentage points from the previous month, indicating that the production and business activities of mainland enterprises continued to expand overall.
Zhao Qinghe, a senior statistician at the Service Industry Survey Center of the National Bureau of Statistics, said that in November, the manufacturing purchasing managers' index, the non-manufacturing business activity index and the composite PMI output index fell by 0.1, 0.4 and 0.3 percentage points respectively from the previous month.
The manufacturing PMI fell again within the contraction range
The manufacturing PMI in November was slightly lower than the previous month by 0.1 percentage points, continuing to decline in the contraction range. Last month, the manufacturing PMI ended a four-month rebound and fell into contraction territory.
Zheng Houcheng, chief macroeconomist of Yingda Securities Company, believes that the manufacturing PMI has been below the boom and bust line for two consecutive months, hitting a new low in nearly four months, indicating that the current macroeconomic pressure on the mainland still exists.
Wang Qing, chief macro analyst of Oriental Jincheng, said that the market is widely expected that the manufacturing PMI will rebound in November, but the specific reading will further decline from the previous month.
Zhao Qinghe pointed out that the decline in manufacturing PMI in November was mainly affected by factors such as some manufacturing industries entering the traditional off-season and insufficient market demand.
From the perspective of sub-indexes, the production index (50.7%, down 0.2 percentage points from the previous month) and the supplier delivery time index (50.3%, up 0.1 percentage points from the previous month) were higher than the critical point, and the new orders index (49.4%, down 0.1 percentage points from the previous month), the raw material inventory index (48.0%, down 0.2 percentage points from the previous month) and the employment index (48.1%, up 0.1 percentage points from the previous month) were below the critical point.
According to Zhao Qinghe's analysis, the new orders index was slightly lower than the previous month. From the perspective of industries, the new orders index of pharmaceutical, automobile, railway, ship, aerospace equipment and other industries are higher than 53.0%, and the market demand of related industries is released quickly. At the same time, the survey results show that the proportion of enterprises in the manufacturing industry reflecting insufficient market demand is more than sixty percent, and the lack of market demand is still the primary difficulty facing the recovery and development of the manufacturing industry.
"An important reason for the current lack of demand in the manufacturing industry is the weak consumption of goods. Wang Qing said, "The current consumer demand is weak and the price level is low, which means that there is more room for policies to promote consumption before the end of the year, including the large-scale issuance of consumption vouchers and consumption subsidies." ”
Look at external demand and domestic demand respectively. In terms of external demand, the index of new export orders in November fell by 0.5 percentage points from the previous month to 46.3%, hitting a new low in nearly four months. Zheng Houcheng analysis, looking forward to November, although facing the downward trend from the base, but in the context of a slight year-on-year decline in PPI month-on-year, superimposed in October, the total sales of retail and food services in the United States fell by 0.35 percentage points compared with September, a new low in nearly three months, and the year-on-year export value in November will most likely be in the negative range, without the basis for a significant upward movement.
In terms of domestic demand, Zheng Houcheng said that although the "new orders index - new export orders index" recorded 3.1 percentage points, the main reason is that the new export orders index has declined significantly, and the new orders index has been in the contraction range for two consecutive months, superimposed on the situation that the growth rate of real estate investment is likely to continue to be under pressure.
From the perspective of production, Wang Qing analyzed that driven by the month-on-month contraction of market demand for two consecutive months, the production index also declined in November, but it was still above the balance line of prosperity and decline for six consecutive months.
"In November, the new orders index was under pressure, and the raw material inventory index and finished product inventory index (48.2%, down 0.3 percentage points from the previous month) both fell from the previous value, combined with the real economy, the mainland's export growth rate and real estate investment growth continued to be under pressure, especially in October, the inventory of finished products of industrial enterprises turned down year-on-year, which means that mainland production may still face certain pressure in the short term. Zheng Houcheng said.
From the price side, the ex-factory price index in November (48.2%, up 0.5 percentage points from the previous month) and the purchase price index of major raw materials (50.7%, down 1.9 percentage points from the previous month) "rose and fell", Wang Qing believes that this is corroborated by the recent decline in the prices of commodities such as international crude oil, showing that the price pressure of manufacturing enterprises has been significantly eased recently, which is conducive to consolidating the momentum of manufacturing profits.
There are also some positives to keep an eye on. The production and business activity expectation index in November (55.8%, up 0.2 percentage points from the previous month), a new high since March 2023, "On this basis, considering that the industrial added value in November 2022 is at a relatively low level year-on-year, it is expected that under the effect of the base effect, the year-on-year increase in industrial added value in November 2023 may not be bad." Zheng Houcheng said.
"In November, the manufacturing employment index improved marginally, and manufacturing enterprises are expected to be in the expansion area, reflecting that the manufacturing industry remains optimistic about the follow-up market demand, and drives the expansion of recruitment, indicating that the production and investment momentum of follow-up enterprises will be enhanced. At the same time, the high-tech manufacturing industry maintained a high degree of prosperity, and enterprises remained optimistic about the future expectations. Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, said.
In addition, the PMI of small enterprises in November fell by 0.1 percentage points from the previous month to 47.8%, still below the critical point, and at the same time, the new orders index of small enterprises in November was 46.7%, a sharp decrease of 1.1 percentage points from the previous month. As small enterprises are the main force in absorbing urban employment, it is expected that the policy of stabilizing growth in the coming period will be further tilted towards boosting household consumption and supporting small and micro enterprises.
The pace of non-manufacturing expansion has slowed
In November, the non-manufacturing business activity index was 50.2%, down 0.4 percentage points from the previous month, still above the critical point, and the pace of non-manufacturing expansion slowed down.
"The non-manufacturing business activity index fell in November, mainly dragged down by the decline in the business activity index of the service industry, of which the sluggish performance of real estate, leasing and other industries constituted a significant drag on domestic service industry activities. Zhou Maohua said.
According to the data, the business activity index of the service industry in November was 49.3%, down 0.8 percentage points from the previous month, and it was the first time this year that it entered the contraction range. In this regard, Wang Qing pointed out that one of the main reasons is the impact of seasonal fluctuations such as the fading of the holiday effect. Affected by the high base in the previous period, the recent continuous decline in the service PMI is in line with expectations. Since the PMI of the service industry is a month-on-month indicator, the recent continuous decline will not change the trend of the service industry maintaining high growth year-on-year, and the service industry will continue to play a major role in the economic recovery process before the end of the year.
The construction sector is expanding at an accelerated pace. Zhao Qinghe said that the business activity index of the construction industry in November was 55.0%, an increase of 1.5 percentage points from the previous month, rising to a higher prosperity range, and the construction progress of the construction industry continued to accelerate. From the perspective of market expectations, the business activity expectation index was 62.6%, which continued to rise in the high boom range, and the confidence of construction enterprises in the recent market development rose steadily.
Zhou Maohua said that the business activity index of the construction industry continued to maintain a high boom range, reflecting the acceleration of the issuance of special bonds in China in recent months, and the strong promotion of key projects to start construction.
What does the future hold?
Wang Qing pointed out that on the whole, the manufacturing PMI in November fell further in the contraction range, the non-manufacturing PMI fell sharply, and the composite PMI output index fell from the previous month. This shows that since the beginning of the fourth quarter, in the process of maintaining macroeconomic expansion as a whole, the recovery momentum has once again shown signs of weakening, which is inconsistent with the background of fiscal policy concentration in the fourth quarter. It shows that in the context of weak consumer confidence and the real estate industry continuing to be in the adjustment stage, the foundation for economic recovery is not yet solid. It is judged that the implementation of the policy of stabilizing growth before the end of the year needs to be strengthened, among which, the investment in major projects should accelerate the formation of physical workload, and the measures to stabilize the property market will be further increased.
Looking forward to the next stage of the trend, Zhou Maohua believes that the domestic commodity consumption market still has a lot of room for repair, macro policy assets are not reduced, the profitability of the manufacturing industry is improving, at the same time, the domestic equipment and high-tech manufacturing industry maintains a good expansion trend, and the manufacturing industry is expected to improve the trend; but the improvement is affected by the pace of domestic demand recovery, seasonality and overseas demand prospects, and the manufacturing PMI index is expected to remain around 50% in the next few months.
In terms of non-manufacturing, Zhou Maohua said that from the trend point of view, domestic economic activities have returned to normal, and the effect of a series of incremental macro policies such as promoting consumption and stabilizing the property market is expected to continue to be released, and the confidence of residents and enterprises is gradually recovering, and service industry activities are expected to return to the area of steady expansion.
Wang Qing pointed out that there are three main uncertainties affecting the PMI index in the later period, one is whether the property market can stabilize and recover quickly under the prospect of continuous real estate support policies, "This is the key point of the current macro economy, and it is also the key to determining the level of manufacturing prosperity." "The second is whether infrastructure investment can quickly form a physical workload before the end of the year after the recent fiscal policy has steadily increased significantly;