Wang Han et al.: In September, the PPI-CPI scissors difference reached a new high, and the profit growth rate of the downstream industry was relatively slow

Zhongxin Jingwei October 28 Title: "Wang Han et al.: September PPI-CPI scissors difference reached a new high, downstream industry profit growth rate is relatively slow"

　　Author Wang Han (Managing Director and Chief Economist of Industrial Securities) Duan Chao (Senior Macroeconomic Analyst of Industrial Securities) Peng Huaying (Macroeconomic Researcher of Industrial Securities)

　　On October 27, the National Bureau of Statistics released the profit data of industrial enterprises above designated size in the country in September. The data shows that from January to September, the total profit of industrial enterprises above designated size in the country was 6,344.08 billion yuan, an increase of 44.7% year-on-year (calculated according to comparable caliber), an increase of 41.2% over January-September 2019, and an average increase of 18.8% in two years. Our comments on this are as follows:

　　In September, the profits of industrial enterprises achieved steady growth. In September, the profits of industrial enterprises above designated size in the country increased by 16.3% year-on-year, an increase of 28.35% over the same period in 2019. From a structural point of view, affected by policies such as "double control of energy consumption", the production capacity of high-energy-consuming enterprises in the middle and upper reaches is limited, the costs caused by the rise in superimposed coal prices have risen, and the price increases in the middle and upper reaches of the industry have brought about an increase in profits. Downstream industries, especially those with less added value, have limited profit growth. There is a differentiation of profit performance between industries.

　　Under the influence of policies such as "double control of energy consumption", the profits of the middle and upper reaches have risen significantly. Since September, with the country's emphasis on the goal of "double control of energy consumption" and the tightening of policies, some high-energy-consuming industries are facing production restrictions or environmental protection rectification, and industries such as coal and steel are facing a tight balance between supply and demand, and have pushed up prices. From the perspective of industry profits, the profit scale of the mining industry and raw material manufacturing industry has expanded significantly, and the profits in the third quarter have increased by 2.04 times and 42.5% year-on-year, respectively, driving the rapid growth of industrial enterprises' profits. Among them, the profit of the coal industry in the third quarter increased by 2.72 times year-on-year, and the growth rate accelerated significantly compared with the second quarter, and other middle and upstream raw material manufacturing industries also achieved rapid profit growth. The impact of "dual control of energy consumption" began to be reflected in the black industry.

　　The profit growth of the downstream industry is relatively slow, but the space for high-tech industries is large. In September, the PPI-CPI scissors gap hit a record high, and the profit growth rate of the downstream industry was relatively slow. However, due to the high added value of the high-tech industry and the focus of development in the current big power game, the profit of high-tech manufacturing industry maintained rapid growth in September. Among them, driven by the continuous strong demand for new crown vaccines, the profit of the pharmaceutical manufacturing industry in the third quarter increased by 66.8% year-on-year, continuing the rapid growth trend since the beginning of the year.

　　The profit growth rate of the external demand export industry continues to slow down. In September, the profit growth rate of export-oriented industries continued to decline, and it was significantly lower than the level at the beginning of the year. September exports exceeded expectations mainly supported by prices, while the number of exports did not see a significant increase. At present, the global epidemic situation is still repeated in stages, and the stability of the supply chain may still have basic support for China's external demand.

　　The speed of replenishment of finished products has slowed down slightly, and it is necessary to pay attention to changes in the growth rate of inventory in the future. The inventory of finished products in September increased by 13.7% year-on-year, and the rate of replenishment of inventory fell for the first time since May. Judging from the volume price of split inventory, the actual inventory growth rate may decline in September under the background of continuous price increases. In the future, we need to continue to pay attention to the impact of marginal changes in the two main lines of bulk prices and exports on the profits of industrial enterprises, as well as changes in inventory growth in the future. (Zhongxin Jingwei APP)

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