Event: manufacturing pmi50 in November 1% (former 49.2%); non manufacturing PMI 52.3% (former 52.4%).
Core view: in November, PMI returned to the expansion range, with both joy and worry: the good news is that the effect of limiting production and correcting deviation has appeared, the supply has been repaired, the price has fallen, there are signs of infrastructure development, and the economic situation has improved marginally; The worry is that real estate and consumption are still weak, and the problem of “stagnation” on the demand side is further highlighted. On the whole, the current downward pressure on the economy is still great, and the GDP growth rate in the fourth quarter may fall below 4%. Combined with a series of recent meetings and speeches, China’s policies may be beginning to turn in an all-round way, focusing on the Political Bureau meeting and the central economic work conference in December, the strength of real estate rectification and the rhythm of infrastructure development.
1. The manufacturing industry returned to the expansion range, the service industry fell slightly, and the overall economic margin improved. In November, the PMI of manufacturing and non manufacturing industries were 50.1% and 52.3%, with changes of 0.9% and – 0.1% respectively compared with the previous month. Among them, the PMI of manufacturing industry returned to the expansion range after two months, which was the first stabilization and recovery since March; In November, the PMI of service industry fell by 0.5 percentage points to 51.1%, the PMI of construction industry rebounded to 59.1%, and the comprehensive PMI output index rebounded by 1.4 percentage points to 52.2%.
2. By item, we can focus on the five signals of supply and demand, trade, price, inventory and Employment:
1) Industrial production rebounded significantly, supply rose more than demand, and foreign demand continued to be better than domestic demand. On the supply side, the PMI production index in November was 52.0%, up 3.6 percentage points from the previous month, and returned to the line, mainly due to the easing of power shortage, the obvious decline of raw material prices and the accelerated release of manufacturing capacity, including the accelerated production of papermaking, transportation equipment, electrical machinery and other industries; Combined with the differentiation of the operating rate trend in November, the operating rates of PTA and automobile semi steel tires have rebounded, pointing to the continuous improvement of supply constraints such as dual control, power and production restriction, and the growth rate of industrial added value may continue to rebound in November. On the demand side, the PMI new orders and new export orders index in November increased by 0.6 and 1.9 percentage points respectively compared with the previous month. External demand was better than domestic demand, and the increase of supply was greater than demand.
2) Import and export orders have improved slightly, and the short-term toughness of exports is still strong. On the export side, new export orders rebounded by 1.9 percentage points to 48.5% in November, rebounding for the second consecutive month. Combined with the recovery of the average export growth rate of South Korea on the first 20 November, China’s container freight rates also remained high. With the advent of the Christmas consumption season in Europe and America, it is expected that exports will remain strong in November; In the future, if the current round of Omicron variant virus causes the global epidemic to deteriorate again, it may support China’s exports from both supply and demand. On the import side, import orders rose 0.6 points to 48.1% in November, indicating a slight improvement in imports with the improvement of China’s economy.
3) Prices fell sharply, and PPI is expected to fall to about 10.8% year-on-year in November; Supply repair drives inventory recovery. On the price side, the raw material price and ex factory price index fell sharply by 19.2 and 12.2 percentage points month on month in November respectively, mainly due to the continuous increase in the implementation of policies such as “ensuring supply and stabilizing price” in the near future, combined with the significant decline in the prices of rebar, cement and chemical products in November, the price of power coal remained low, It is expected that the PPI in November will fall to 10.8% (13.5% in October) year-on-year, and the superimposed base will rise, and the subsequent PPI may tend to fall year-on-year. On the inventory side, the PMI inventory index of raw materials and finished products will rise by 0.7% and 1.6% respectively in November. We reported in September that the structural contradiction between supply and demand is prominent, focusing on three policy clues – five signals of PMI in September It has been suggested that if the dual control policy is relaxed and the supply recovery is faster than the demand, it will return to the inventory replenishment track. At present, the main reason for the inventory recovery this month is that the supply has been repaired.
4) The prosperity of small and medium-sized enterprises has improved and the employment in the construction industry has deteriorated. In November, the PMI of large enterprises fell slightly by 0.1 percentage points to 50.2%, and the PMI of medium and small enterprises rose by 2.6 percentage points and 1.0 percentage points to 51.2% and 48.5% respectively, both of which rebounded for the first time after falling for three consecutive months. The pressure of production and operation has eased, which also indicates that the upstream squeeze on the profits of the middle and lower reaches will be reduced in November; In terms of employment, the employment index of manufacturing industry, service industry and construction industry changed by 0.1, 0.0 and – 1.1 percentage points respectively in November. The employment index of construction industry fell more, which may reflect the impact of the recent real estate downturn on employment.
5) The impact of the epidemic is limited, and the prosperity of the service industry has dropped slightly; The construction industry has picked up, and there are signs of infrastructure development. In terms of service industry, PMI of service industry fell by 0.5 percentage points to 51.1% month on month in November, mainly due to the multi-point spread of the epidemic in November and many affected areas. It is expected that consumption will be impacted again in November. However, it is noted that the impact of the epidemic from October to November on the service industry is significantly less than that in August, mainly because China’s current epidemic prevention and control mechanism is relatively mature and the epidemic control is relatively rapid; In the construction industry, the PMI of the construction industry rebounded by 2.2 percentage points to 59.1% in November, of which the business activity index of the civil engineering construction industry increased by 5.4 percentage points month on month. Combined with the issuance of about 560 billion yuan of new special bonds in November, the net financing of urban investment bonds also rebounded. It is expected that the growth rate of infrastructure investment may stabilize and recover in November.
3. On the whole, the PMI data in November was mixed. The good news was: supply repair, price drop, signs of infrastructure development, and marginal improvement of the overall economic situation; The worry is that the real estate boom and residents’ consumption continue to be depressed, and the demand pressure is still great. Overall, with the repair of supply and the decline of upstream prices, the characteristics of “quasi stagflation” have decreased, but the “stagflation” on the demand side has become more prominent. Maintaining the previous judgment, the current economic pressure is still great, and the GDP growth rate in the fourth quarter may still fall below 4%. The need for stability is further increased. The policy is expected to officially turn to stable and loose, and pay close attention to the Politburo meeting and the central economic work conference in December.
Risk tips: the evolution of epidemic situation, deterioration of external environment and policy strength exceed expectations
