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In December 2021, the manufacturing PMI of the China Bureau of statistics increased by 0.2 to 50.3, the non manufacturing business activity index increased by 0.4 to 52.7, and the comprehensive PMI output index was 52.2, unchanged from the previous month.
Ping An View:
First, industrial production is still expanding, but the kinetic energy is obviously weakened. In December, the manufacturing PMI production index decreased by 0.6 month on month to 51.4, but it is still in the expansion range. The main reason for the continued expansion of manufacturing enterprises' production in December is still the willingness of middle and downstream enterprises to supplement raw material inventory after the overweight of the policy of ensuring supply and stabilizing price, but the expansion momentum is significantly weaker than that in November.
Second, the trend of domestic and foreign demand is differentiated, with domestic demand warming back and foreign demand falling slightly. In December, the manufacturing PMI new order index rose 0.3 month on month to 49.7. The new order index of pharmaceutical, automobile, computer communication electronic equipment and other industries continued to be in the boom range. However, the new export order index fell 0.4 to 48.1 month on month, which has been below the boom and bust line for eight consecutive months, which means that exports in December may slow down slightly compared with the strong performance in November.
Third, the manufacturing industry continues to "passively replenish inventory", especially the repair of raw material inventory. In December, the manufacturing PMI production index fell from a high level, while the finished product inventory, especially the raw material inventory, was further repaired, which means that the demand growth is weak (the new order index is still in the contraction range). The raw material inventory has increased significantly, or the willingness of middle and downstream enterprises to supplement raw material inventory has been released after the decline of commodity prices.
Fourth, the two price index sub items in the manufacturing PMI continued to fall sharply, both falling below the boom and bust line. In December, the manufacturing PMI ex factory price sub index continued to decline by 3.4 to 45.5, and the purchase price of main raw materials decreased by 4.8 to 48.1. Based on this, it can be estimated that the PPI in December was about 11.1% year-on-year, further establishing the downward trend compared with 12.9% in the previous month.
Fifth, the production and operation status and confidence of small and medium-sized enterprises have further deteriorated, which is obviously deviated from that of large and medium-sized enterprises. In December, the production, new orders and employees of small enterprise manufacturing PMI fell, while the raw material inventory picked up, and the supplier distribution time was also prolonged. More importantly, the expected production and operation activities of small enterprises decreased significantly by 4.0 to 47.9, and the confidence of enterprises in future operation was significantly weakened. The urgency of policy overweight to support small enterprises is further highlighted.
In the non manufacturing sector, the recovery of PMI in the service sector led to the rise of PMI in the non manufacturing sector, but the supply and demand of the construction industry weakened simultaneously. The business activity index of industries greatly affected by the epidemic, such as air transportation, catering, culture, sports and entertainment, rose to the expansion range last month. Factors such as cold wave weather and approaching holidays have a certain impact on the construction industry in December. At present, there is no sign of obvious rebound in infrastructure.
Overall, PMI data show that China's economy continues to "recover slightly", and the suppression of rising commodity prices on industrial production begins to gradually eliminate. However, structural problems in the economy are becoming more prominent, especially the production and operation status and confidence of small and micro enterprises are weakening, and more measures are needed to reduce taxes and fees, structural monetary policy and aggregate demand boosting policy Step up the introduction and speed up the implementation.
