event:
On 30 November, The National Bureau of Statistics announced that China's Manufacturing Purchasing Managers' index (PMI) in November was 50.1 (the previous value was 49.2). The rebound of PMI was largely driven by the improvement of supply, which was highly consistent with our prediction (PMI data review in October) ）。 Looking forward to the future, the rebound of the manufacturing sector may only be short-lived, and the weakness of the demand side is still the main factor restricting the economic operation. We believe that it may be necessary to make greater policy adjustments focusing on stimulating demand - the first thing we need to pay attention to is the central economic work conference next month.
Key investment points:
PMI indicators show that the manufacturing industry may improve significantly in November. Although the PMI index rebounded only mildly in November excluding seasonal factors - the rebound of nearly 1% of its original data is largely related to seasonal factors, the month on month improvement of the actual manufacturing sector may be better than the level shown by the PMI seasonally adjusted data.
This is related to the fact that PMI supplier delivery time, one of the sub indexes of PMI, is calculated by subtracting the index from 100 and then weighting PMI under the background of power and production restriction. Generally speaking, when suppliers cannot supply goods in time, the decline of this sub index is the performance of economic prosperity; Conversely, suppliers can deliver goods on time, and the rebound of the index indicates insufficient demand. However, this logic is not applicable to the special environment of power and production restriction. In fact, since November, coal supply has made significant progress, power and production restrictions have been greatly alleviated, the manufacturing supply chain has been significantly improved, and the PMI supplier distribution time sub index has rebounded significantly. According to the conventional calculation method, this actually lowers the PMI composite index - of course, it has nothing to do with the economic downturn.
If the influence of this factor is excluded, the PMI index will rebound more obviously even excluding seasonality - which means that industrial production may improve to a considerable extent in November.
