Economic Observer Reporter Li Xiaodan Intern Reporter Zhu Jianuo Du Jiaqi The macro economy continues to maintain a recovery trend, and prices have rebounded moderately, but the output price index is weak, and the cash flow situation of enterprises still needs to be improved.
Macro data shows that the CPI fell by 0.6 percentage points to 0.1% in March 2024; The year-on-year decline in PPI widened, down 0.1 percentage points from the previous month to -2.8%, the manufacturing PMI was 50.8%, up 1.7 percentage points from the previous value, the investment in fixed assets increased by 4.5% year-on-year in March 2024, the new RMB loans were 3.09 trillion yuan, an increase of 1.64 trillion yuan year-on-year, and the M2 growth rate was 0.4 percentage points lower to 8.7%.
The "Economic Observer Monthly Observation", initiated by the Economic Observer, is published once a month. A total of 11 institutions participated in the monthly macro data forecast.
CPI: Consumer demand fell seasonally, and the core CPI was relatively stable
CPI (YoY): 0.1%
Previous:0.7%
CPI Forecast (YoY): 0.3%
Liu Peizhong, a researcher at the Bank of China Research Institute, commented: The month-on-month decline in CPI in March is consistent with the seasonal characteristics of the decline in consumer demand after the holiday, but the month-on-month decline in CPI is slightly greater than the historical average of the Spring Festival in February.
Ctrip data shows that after the Spring Festival (February 20-26) in 2024, compared with the Spring Festival, the price of air tickets will drop by about 20%, which is 12 percentage points higher than that in 2023 under the same statistical caliber. Affected by this, the year-on-year increase in education, culture and entertainment prices in March narrowed by 2.1 percentage points from the previous month to 1.8%, of which the year-on-year increase in tourism prices narrowed sharply from 23.1% in the previous month to 6% this month; The year-on-year increase in core CPI narrowed by 0.6 percentage points from the previous month to 0.6%, driven by the decline in service prices, which was unchanged from the year-on-year increase of 0.6% at the end of 2023. In terms of consumer goods, the prices of small household appliances, home textiles, and household daily necessities rose between 1.1% and 3.2%, and the increase increased.
PPI: Prices in some industries have fallen, and the impact of external demand needs attention
PPI Published Value (YoY): -2.8%
Prior:-2.7%
PPI Forecast (YoY): -2.7%
Zhang Xiaojiao, senior macro analyst of Bank of China International Securities, commented: PPI fell 0.1% month-on-month and 2.8% year-on-year in March, the means of production decreased by 3.5% year-on-year, and the means of living decreased by 1.0% year-on-year. PPIRM decreased by 3.5% year-on-year. From a year-on-year perspective, the decline rate of five industries, namely coal mining and washing industry, non-metallic mineral products industry, ferrous metal smelting and rolling processing industry, agricultural and sideline food processing industry, computer communication and other electronic equipment manufacturing industry, all expanded compared with the previous month, and the total impact of PPI decreased by about 1.62 percentage points year-on-year;
Pay attention to the marginal impact of external demand on the prices of industrial products. The year-on-year growth rate of PPI in March was lower than market expectations, mainly due to the relatively sufficient supply side of industrial products. Under the influence of the base effect, the year-on-year growth rate of PPI began in April or began to fluctuate upward, but whether the growth rate can return to positive throughout the year or still needs to observe whether the demand side and the domestic supply side have exceeded expectations. In addition, in the March PMI data, new export orders rose sharply month-on-month above the boom and bust line, and external demand may become an unexpected factor that marginally affects the year-on-year growth rate of PPI.
PMI: The rebound is obvious, which is conducive to stabilizing micro expectations
PMI (YoY): 50.8%
Prior:49.1%
PMI Forecast (YoY): 50.8%
Guo Lei, chief economist of GF Securities, commented: March is the post-holiday resumption season, and it is not surprising that PMI will rise seasonally month-on-month, but what is unexpected is that the amplitude is further super-seasonal. What are the driving factors behind this? From the perspective of enterprise types, the PMI of small enterprises contributed significantly higher in March, rising by 3.9 points month-on-month. Generally speaking, large and medium-sized enterprises are sensitive to investment in raw materials and fixed assets, while small enterprises are mainly sensitive to export demand and service demand. For example, the small business PMI can be seen to have a high correlation with new export orders. The export orders index rose by 5.0 points month-on-month, the highest reading in 13 months, and the service sector rose by 1.4 points month-on-month, the highest reading in nine months. The quarterly GDP statistics are based on the production method, and the industrial added value in January and February has a high growth rate at the beginning, and the PMI in March further exceeds expectations, and the corresponding quarterly GDP growth rate may exceed market expectations. This is positive for stabilizing micro expectations, and at the same time, there may be divergence in the market's understanding of the follow-up policy space. The March PMI also showed the shortcomings of the current economy, and the weak output price index also needs to be changed urgently.
Fixed investment: slightly more than expected, the capacity utilization rate of the manufacturing industry is expected to stabilize
Fixed investment announced value (year-on-year): 4.5%
Prior:4.2%
Fixed investment forecast (YoY): 4.3%
Guo Rui, an analyst at Shanxi Securities, commented: fixed asset investment slightly exceeded expectations, mainly supported by manufacturing and infrastructure. The growth rate of fixed asset investment in March was 4.5%, with a two-year average growth rate of 4.8% (the previous value was 4.8%), higher than the central level of 4.0% in the past four years. Real estate-related indicators continue to adjust, with the decline in investment and funding sources widening, and the decline in sales and new construction slowing down. The growth rate of infrastructure investment is stable marginally, the pace of manufacturing investment is stable, and the industrial production and sales rate and capacity utilization rate have declined in the first quarter of 2024. As the demand side continues to recover in the second quarter, the capacity utilization rate of the manufacturing industry is expected to stabilize, supporting the growth rate of manufacturing investment, but there is limited room for sustained upward movement on a high base.
Credit: The scale of new additions is weak, which is basically in line with market expectations
Announced value of new credit (year-on-year): 3,090 billion yuan
Previous value: 1.45 trillion yuan
Forecast value of new credit (year-on-year): 3.36 trillion yuan
Zhang Deli, head of the macro team of Zhongtai Securities Research Institute, commented: New RMB loans in March were 3.09 trillion yuan, a year-on-year increase of 800 billion yuan. New short-term, medium- and long-term loans to residents and enterprises all increased slightly year-on-year. Among them, the new medium and long-term loans to residents in March were 451.6 billion yuan, although there was a marginal improvement compared with -103.8 billion yuan in February, but compared with the same period in recent years, the scale of this new increase in March was weak. Sluggish new home sales and prepayment of mortgages will continue to suppress residents' medium and long-term loans. In March, the new medium and long-term loans to enterprises were 1.6 trillion yuan, although they increased by 470 billion yuan year-on-year, but in March of previous years, the new medium and long-term loans to enterprises in March this year were the second highest in history, only lower than those in March 2023.
With the issuance of supporting loans for projects connected with financial funds such as special bonds, special treasury bonds, and ultra-long-term special treasury bonds, as well as the implementation of policies such as equipment renewal and trade-in of consumer goods, new medium and long-term loans of enterprises are expected to remain resilient. After two months of sharp increases, new non-bank loans in March grew by 195.8 billion yuan, which was at a low level compared with the same period of the previous year.
M2: Corporate and non-bank deposits increased slightly year-on-year, and the cash flow situation still needs to be improved
M2 (YoY): 8.3%
Previous:8.7%
M2 forecast (YoY): 8.6%
Yi Xiang, chief economist of Huatai Securities, commented: The year-on-year growth rate of M2 in March slowed down to 8.3% from 8.7% in February, and after seasonal adjustment, the month-on-month (non-annualized) growth rate of M2 in March fell to 0.6% from 0.8% in February. On the other hand, the balance of fiscal deposits in March fell by 766.1 billion yuan month-on-month and decreased by 75.1 billion yuan year-on-year, so the year-on-year growth rate of fiscal deposits rebounded to 4% from 2.2% in February. The year-on-year growth rate of M1 fell to 1.1% in March from 1.2% in February, and the month-on-month (non-annualized) growth rate also eased to 0.2% from 0.4% in February, indicating that the cash flow position of enterprises still needs to be improved.