Core view
From January to February, the economy made a good start, and the performance of both supply and demand sides greatly exceeded the market expectations, which was closer to our forecast. We adhered to the judgment that GDP increased by 5.7% year-on-year in the first quarter. Under the demand of steady growth, the supply tightening policy was corrected, the local government was willing to make a good start, and the industry took the lead, with a year-on-year increase of + 7.5% from January to February. On the demand side, social zero was + 6.7% year-on-year. The local Chinese new year was weakened, local consumption was released, and the power of government consumption was superimposed. The apparent growth rate of social zero was significantly improved. In terms of investment, from January to February, the investment in manufacturing industry increased by + 20.9% year-on-year. The high growth of manufacturing investment was supported by many factors, such as industrial foundation reconstruction, strong chain supplement, technological transformation and high export boom; Infrastructure investment was + 8.1% year-on-year, and the financial pre effect was obvious. Steady growth is still the primary goal of monetary policy. The financial data in February was slightly lower than expected. The probability of subsequent RRR reduction by the central bank increased, and continued to expand credit and stabilize growth. Under this combination, the long-term interest rate will pay more attention to wide credit in the future. We believe that the yield of 10-year Treasury bonds will reach a high of about 3% in the second quarter. In terms of equity, focus on the growth stock switching opportunities brought by the peak yield of US bonds in the future.
The release of supply has also been fulfilled, and industry has made a good start
From January to February, the added value of industries above designated size increased by 7.5% year-on-year, much higher than wind's consensus expectation of 3.2%, which is closest to our expected growth rate of 5.5%. The main reason for the fulfillment of the "industry has made a good start and contributed to steady growth" prompted by us in the early stage is that the industrial steady growth policy has been gradually implemented to deal with the supply impact, and the correction of tight policies has helped to release industrial production. There are still positive supporting factors for domestic and foreign demand, and manufacturing production is expected to actively develop under the background of export toughness, new energy of industry and industrial digitization. At the same time, local governments have made a good start, strongly demanding that the factors of catching up with work make the working hours longer than the season, and promote the high growth of industry. From January to February, under the background of the aggravation of the epidemic rebound and the zeroing policy, the production index of the service industry increased by 4.2% year-on-year, up 1 percentage point from December last year, reflecting that the production of the service industry is under pressure but still resilient. We believe that under the background of the sharp rebound of the epidemic in March, industrial growth will still be better than that of the service industry, supporting the economy to a good start.
The local Chinese New Year is weakening and consumption has improved
From January to February, the total retail sales of social consumer goods increased by + 6.7% year-on-year, compared with the previous value of 1.7%, and the social zero growth rate has improved. This year, the local Chinese new year was weakened, the local consumption scene was repaired, and the sub items of catering, tobacco and alcohol were significantly improved. In addition, the government's consumption front force, communication equipment, cultural and office supplies, etc. maintained high-speed growth, which also formed a strong support for the zero growth rate of the society. Looking ahead, the epidemic situation in March was relatively severe, and many cities raised the level of prevention and control. It is expected that there will be a phased correction of social zero data in March.
Due to the disturbance of Spring Festival, employment rose slightly
In February, the national survey unemployment rate was 5.5%, the previous value was 5.3%, which is equivalent to the level in 2021. The small and micro businesses have been under a heavy pressure and the repeated disturbances of the registered residence also make the short-term labor market pressure increase.
Investment demand exceeded expectations, and manufacturing investment was driven by industrial infrastructure reengineering and strong chain supplement
From January to February, the national fixed asset investment (excluding farmers) increased by 12.2% year-on-year, much higher than the consensus expectation of the market of 5.3%. The investment demand showed an obvious recovery trend. The fixed asset investment (excluding farmers) increased by 1.06% and 0.66% month on month in January and February respectively. Among them, the investment in real estate development increased by 3.7% year-on-year, the investment in infrastructure (excluding power, heat, gas and water production and supply) increased by 8.1% year-on-year, and the investment in manufacturing increased by 20.9% year-on-year. Looking forward to the first quarter and the whole year, we believe that the growth rate of fixed asset investment is more than 10.0% and 7.8% respectively. Among them, the growth rate of infrastructure investment shows a trend of high before and low after. The performance of manufacturing investment is still strong supported by many factors such as industrial foundation reconstruction, strong chain supplement and technological transformation. The real estate investment is expected to achieve positive growth.
Risk warning: the epidemic situation worsened beyond expectation; The geopolitical game among big powers has changed beyond expectations; The Fed tightened its policy more than expected.
