Event: manufacturing pmi50 in January 2022 1% (former 50.3%); Non manufacturing pmi51 1% (previous value 52.7%).
Core view: in January, PMI pointed to a slowdown in the economy, highlighting the pressure of insufficient demand, which is reflected in the fact that the epidemic continues to impact the service industry and consumption, the pressure on small enterprises is still high, and the steady growth policies such as loosening real estate and expanding infrastructure have not had obvious effect. Continue to remind that we should not underestimate the determination and strength of steady growth. A series of combined punches are on the way. In the short term, we should pay attention to three points: the progress of easing money and credit, and it is expected that the financing of credit cooperatives may increase significantly in January; Real estate regulation is expected to be substantially loosened, especially the demand side policies such as purchase, sale and loan restrictions may be relaxed; The progress of infrastructure construction still indicates that the high growth of infrastructure construction throughout the year can be expected.
1. Manufacturing PMI decreased slightly in January, which is still stronger than seasonality; PMI of non manufacturing industry fell more, which was significantly weaker than seasonality; Overall economic activity has declined. In January, the PMI of manufacturing and non manufacturing industries were 50.1% and 51.1%, down 0.2 and 1.6 percentage points respectively compared with the previous month, of which the manufacturing industry was slightly stronger than the seasonality, and the non manufacturing industry was significantly weaker than the seasonality (the Spring Festival in recent ten years was at the end of January and the beginning of February in 2011, 2014, 2017 and 2019, and the corresponding PMI of manufacturing and non manufacturing industries fell by 0.4 and 0.5 points respectively in January). In January, the PMI of the service industry fell by 1.7 percentage points to 50.3%, the PMI of the construction industry fell by 0.9 points to 55.4%, and the comprehensive PMI output index fell by 1.2 percentage points to 51.0%, pointing to the continued expansion of the overall economy, but the activity decreased.
2. By item, we can focus on the five signals of supply and demand, trade, price, inventory and Employment:
1) industrial production has slowed down slightly, but it is stronger than seasonality, and the pressure of insufficient demand is prominent. On the supply side, the PMI production index in January was 50.9%, a continuous decrease of 0.5 percentage points over the previous month, still expanding the range, with a decrease of less than 0.8 points seasonally; Combined with the fact that the operating rate of coking enterprises and PTA continued to rise in January, the supply constraints such as dual control power limitation continued to improve, which still supported industrial production. In terms of industries, food and beverage, paper and printing, sports and sporting goods and other industries related to consumption during the Spring Festival holiday grew rapidly. On the demand side, the PMI new orders and new export orders index changed by - 0.4 and 0.3 percentage points respectively in January. The decline of the new orders index is basically in line with the seasonality, pointing to that external demand is still the support, and domestic demand has fallen more.
2) export orders rebounded slightly. It is expected that the short-term toughness of exports will remain strong and imports will fall slightly. On the export side, new export orders rose 0.3 percentage points to 48.4% in January, which was significantly stronger than the seasonality. Combined with China's container freight rate reaching a new high, the spread of overseas Omicron virus and other factors, China's exports are expected to remain strong in the short term. On the import side, import orders fell by one point to 47.2% in January, reflecting the slowdown of China's economy and the downturn of domestic demand.
3) the price has rebounded significantly, and it is expected that the PPI in January will continue to fall to about 9.1% year-on-year; Inventories fell slightly. On the price side, the raw material price and ex factory price index in January rose by 8.3 and 5.4 percentage points respectively month on month. The return to the expansion range should be related to the recent rebound in international crude oil and iron ore prices. However, under the influence of the continued rise of the base, it is expected that the PPI in January will continue to fall to about 9.1% year-on-year (10.3% in December). The subsequent PPI still tends to fall year-on-year, and the profit will continue to tilt to the middle and lower reaches. On the inventory side, the PMI inventory index of raw materials and finished products fell by 0.1 and 0.5 percentage points respectively in January, of which the decline of raw material inventory was small. The main reason was that enterprises actively prepared goods before the festival, but it was still significantly weaker than seasonality, which still reflected the constraints of price recovery and insufficient demand on the willingness to replenish stocks. Maintaining the previous judgment, throughout the year, from the perspective of inventory growth level, historical law and leading indicators, it is possible to gradually turn to destocking in 2022.
4) the prosperity of small enterprises continued to record low, and the employment in the construction industry fell more. In January, the PMI of large enterprises rebounded by 0.3 percentage points to 51.6%, and the PMI of small and medium-sized enterprises fell by 0.8 and 0.5 percentage points to 50.5% and 46.0% respectively. Among them, the prosperity of small enterprises fell for two consecutive months, reaching a new low since March 2020, which may be related to the continuous recurrence of the recent epidemic in China; In terms of employment, the employment index of manufacturing industry, service industry and construction industry fell by 0.2, 0.3 and 2.6 percentage points respectively in January. The employment of construction industry fell more, which reflected that the real estate infrastructure was still weak.
5) the boom of the service industry has been significantly impacted by the epidemic, the boom of the construction industry has dropped seasonally, and the real estate infrastructure still needs to be developed. In terms of service industry, the PMI of service industry fell 1.7 percentage points to 50.3% month on month in January, mainly due to the recent spread of epidemic in China and more provinces; In terms of structure, the prosperity of accommodation and transportation has fallen more, while the prosperity of financial services is still high. In the construction industry, the PMI of the construction industry fell by 0.9 percentage points to 55.4% in January, slightly better than the seasonality, but combined with the recent trend of asphalt operating rate and building materials price, it points to that the real estate infrastructure chain has not improved significantly in January.
3. On the whole, in January, PMI pointed out that the economy is still slowing down, and the pressure of insufficient demand is prominent, which is reflected in that the epidemic continues to impact the service industry and consumption, the effect of stable growth policies such as loosening real estate and expanding infrastructure has not been shown, and the pressure on small enterprises is still great. Maintaining the previous judgment, the policy will make every effort to stabilize growth in 2022, monetary easing and fiscal front, and real estate and infrastructure may be late but will not be absent. On the whole, it is expected that the subsequent economic momentum may rise steadily: seasonally, the Spring Festival will drag down the PMI in January and February, and will turn stronger in March; From the perspective of policy and fundamentals, Q1 real estate and infrastructure will gradually make efforts, and the period of standard reduction and interest rate reduction and the period of high financing and growth of Q1 credit cooperatives point to the bottom recovery of the economy in the short term.
Risk warning: the epidemic situation and the deterioration of the external environment exceeded expectations, and the implementation of policies was less than expected.
