The overall performance of economic data from January to February was bright, which greatly exceeded market expectations. The cumulative added value of industries above designated size was 7.5% year-on-year (market expectation was 3.2%); The total retail sales of social goods is expected to be 6.6% year-on-year; The cumulative investment in urban fixed assets was 12.1% year-on-year (market expectation was 5.3%), of which infrastructure investment was 8.6%, real estate investment was 3.7% and manufacturing investment was 20.9% year-on-year.
I. economic data "made a good start": high elasticity under low base
There are three points worth noting in this much higher than expected economic reading.
First, low base. Since the epidemic, the economic data have been affected by exogenous shocks and policies. Compared with the central deviation and fluctuation jump before the epidemic, the difficulty of studying and predicting the economic situation has increased significantly. From a year-on-year perspective, the base from January to February last year was significantly low, which was an important reason for the year-on-year increase of various data this year. Last year, the epidemic and the local Chinese new year policy had a great impact on consumption. The financial postposition led to the downturn of infrastructure investment at the beginning of the year, and the investment in manufacturing industry was also affected by the expiration of preferential tax policies. From the perspective of month on month, although the indicators such as industrial added value and fixed asset investment have improved significantly year-on-year, they are still slowing down compared with previous years. Considering last year's low base, we believe that the month on month data can better reflect the real kinetic energy of China's economy.
Second, seasonality. The "good start" of the economy has undoubtedly pushed up the starting point of subsequent growth, but from the perspective of the whole year, January to February is the "small month" of production and investment due to the impact of the Spring Festival holiday. From January to February, industrial added value accounted for about 14% of the whole year, and fixed asset investment accounted for about 8% of the whole year. On the one hand, it means that the task in the next 10 months is still arduous to achieve the economic growth target of 5.5% this year. On the other hand, it can partly explain the high elasticity of this year's "good start" data.
The third is the deviation between macro data and micro data. For example, the growth rate of industrial production is significantly better than that of industrial power consumption, the growth rate of fixed asset investment is opposite to that of crude steel, cement and other inputs, unemployment is rising, but consumption rebounds, etc. Some deviations lack fully credible explanations and need further follow-up observation.
II. Supply: Production deviated year-on-year and month on month, and the marginal pressure on employment increased
The year-on-year growth rate of industrial production accelerated, but the chain kinetic energy slowed down. From January to February, the year-on-year growth rate of industrial added value above Designated Size rose by 3.2pct to 7.5% compared with December last year, but the month on month growth rate after quarterly adjustment was 0.34%, and the rising momentum was weaker than that at the end of last year and the same period in previous years. Among them, the growth rate of the upstream mining industry increased by 2.5pct to 9.8%, the year-on-year growth rate of the midstream manufacturing industry increased by 3.5pct to 7.3%, and the growth rate of the downstream electric heating and water combustion production and supply industry continued to fall by 0.4pct to 6.8%. The high-tech manufacturing industry and equipment manufacturing industry increased year-on-year, and the growth rate of related industries such as electrical machinery and equipment, computer and other electronic equipment and special equipment accelerated. Looking ahead, under the guidance of the 5.5% growth target, the policy is expected to increase support and stabilize the growth rate of industrial production. However, it is worth noting that since late February, the global supply disorder and rising prices of raw materials caused by the conflict between Russia and Ukraine, as well as the upgrading of prevention and control caused by the epidemic in China, may disturb the production of some industries and regions.
The service industry rebounded slightly and is still suppressed by the epidemic. From January to February, the year-on-year growth rate of service industry production index rebounded by 1.2pct to 4.2%, but it is still significantly lower than the level in the same period before the epidemic. On the one hand, driven by spring festival consumption, the boom of transportation, accommodation and other industries rebounded; However, on the other hand, the epidemic continues, the control of epidemic prevention in many places has not been greatly relaxed, and the contact service industries such as catering and retail are still limited. Looking forward, since the end of February, the outbreak of epidemic diseases in many places has led to the upgrading of epidemic prevention measures, and the production of service industry will be greatly impacted in the short term.
In terms of employment, the national urban survey unemployment rate in February rose 0.2pct to 5.5% from the previous month, rising for the fourth consecutive month. Among them, the youth employment situation is relatively severe. From January to February, the survey unemployment rate of urban youth aged 16-24 remained at a high level of 15.3%. Looking forward, the unemployment rate is expected to be difficult to fall quickly due to the impact of the epidemic in the short term, and may later become the wind vane of the "steady growth" policy.
III. investment in fixed assets: the driving force is still weak and the structure is divided
From January to February, the national urban fixed asset investment increased by 12.2% year-on-year, with a significant increase of 7.3pct compared with the whole year of 2021, which is also higher than the level in the same period before the epidemic, but it increased by only 0.6% month on month compared with December last year, which is significantly weaker than the level in the same period before the epidemic. Among them, the margin of real estate investment has stabilized, but it still faces great downward pressure in the follow-up; Investment in infrastructure and manufacturing increased significantly, forming a major support for the economy.
(1) real estate: rebound month on month, subsequent pressure
From January to February, the decline of commercial housing sales accelerated, the sales area of commercial housing in China decreased by 9.6% year-on-year, and the sales amount decreased by 19.3% year-on-year. The sales contraction of large and medium-sized cities and top 100 real estate enterprises was more serious. The transaction area of commercial housing in 30 large and medium-sized cities decreased by 39% year-on-year, and the sales amount of top 100 real estate enterprises decreased by 43% year-on-year.
However, real estate investment stopped falling and rebounded, with a year-on-year growth rate of 17.6pct to 3.7% compared with that in December last year. Real estate investment mainly has two components. First, the land purchase fee. Historically, the land purchase fee lags behind the land transfer income for half a year to three quarters. The steep decline of land transfer income in the second half of last year may still be reflected. The second is the construction and installation investment. The cumulative year-on-year growth rates of newly started, constructed and completed areas from January to February were - 12.2%, 1.8% and - 9.8% respectively. Among them, the construction increased 37pct significantly year-on-year compared with the same month in December last year, which may be driven by the policy of "guaranteed delivery of buildings". In addition, real estate investment rebounded sharply month on month, which may also be related to the expenditure rhythm of real estate enterprises.
It is noteworthy that from the first batch of centralized land supply this year, the year-on-year contraction of land purchase area and land transaction price has intensified, with a contraction of 42.3% and 26.6% respectively from January to February, and the participation of state-owned enterprises and local government platforms continues to increase. 1、 The land premium rate in the second tier cities has picked up, and the overall flow auction rate has improved. The flow auction is concentrated in the third and fourth tier cities and suburban plots.
The funds in place of real estate enterprises continued to shrink, with a year-on-year decrease of 17.7%, which was slightly narrower than that in December last year. Various sources of funds continued to decline. The year-on-year contraction of personal mortgage loans, deposits and advance receipts funded by real estate enterprises intensified to - 27% and - 16.9%, and the contraction of self raised funds and Chinese loans slowed down to - 6.2% and - 21.1% respectively.
Due to the continuous contraction of new construction, the intensification of land purchase contraction, the superposition of sales decline and credit contraction of real estate enterprises, the pressure on real estate investment has not been substantially relieved. Looking forward, the "steady growth" policy related to real estate is expected to continue to increase in the future, which will form a certain support for real estate investment and sales.
(2) capital construction: push forward and speed up to achieve results
From January to February, the infrastructure investment was significantly strengthened. The cumulative growth rate of infrastructure investment increased significantly to 19.6% compared with that of last year. Structurally, the electric heating, water burning, transportation and storage industry grew rapidly, with a year-on-year growth rate of 11.7% and 10.5% respectively. There are two main reasons for the sharp increase in the growth rate of infrastructure investment. First, there are abundant funds and the advance force. Including the new special bonds issued in the fourth quarter of last year, superimposed on the amount of 1.46 trillion new special bonds issued in advance. The government work report requires that fiscal expenditure will expand by more than 2 trillion this year.
Second, major projects in all localities are issued and started early to form physical workload in advance.
Looking ahead, infrastructure investment is expected to maintain rapid growth in the first half of the year, supported by positive willingness to invest in infrastructure, sufficient funds and projects in place. However, from the perspective of the whole year, infrastructure investment is still limited by the strict control of government implicit debt and the intensification of local government revenue and expenditure pressure caused by the reduction of land transfer income.
(3) manufacturing industry: both old and new drivers of growth
Manufacturing investment is the most important force driving the rise of fixed asset investment. From January to February, manufacturing investment increased by 20.9% year-on-year, up 23.4pct compared with the whole year of last year and 17.8pct compared with the same month in December of last year. In terms of structure, the driving forces of manufacturing investment mainly include the following categories: first, the investment in high-tech industry maintained high growth, with a year-on-year growth rate of 42.7%; Second, computer electronic equipment, special equipment and other industries continue to invest and expand production driven by the export boom; Third, upstream industries such as nonferrous metals, petroleum and chemical industry have experienced shortages and price increases due to the conflict between Russia and Ukraine. Coupled with the loose marginal policy constraints, the investment growth rate of relevant industries has increased.
Looking ahead, manufacturing investment is expected to continue to maintain a high growth rate. First, economic transformation and upgrading will promote high-tech manufacturing to maintain high growth. Second, under the guidance of carbon reduction and rectification, manufacturing constraints will be eased, and energy conservation and carbon reduction transformation and new energy investment will promote manufacturing investment. Third, macro policies are expected to support manufacturing investment: on the one hand, under the background of "wide credit", structural monetary policy will be strengthened; On the other hand, there will be 2.5 trillion tax cuts and fee reductions this year, of which 1.5 trillion will focus on supporting manufacturing, small and micro enterprises and individual industrial and commercial households. However, if the price of raw materials remains high, the differentiation of enterprise profits and weakening of expectations have not been significantly improved, which will put pressure on the investment of some manufacturing industries.
IV. consumption: a sharp rebound under the low base
The growth rate of social consumption rebounded sharply. From January to February, the total retail sales of social consumer goods was 7442.6 billion yuan, an increase of 6.7% year-on-year, 5.0 PCT faster than that in December 2021. It is worth noting that the travel situation of this year's Spring Festival is significantly better than that of last year, and the recovery of consumption growth is also partly affected by the low base brought by the local spring festival policy last year.
Structurally, first, the growth rate of catering consumption picked up. Catering revenue was 771.8 billion yuan, with a year-on-year growth rate of 8.9%, 2.4pct higher than that of commodity retail, or related to the relaxation of epidemic prevention policies and the issuance of more consumption vouchers. Second, online consumption of goods and services continued to drive consumption growth. From January to February, driven by activities such as the "online annual goods Festival", the national online retail sales reached 1955.8 billion yuan, a year-on-year increase of 10.2%. Among them, the online retail volume of physical goods was 163711 billion yuan, an increase of 12.3%.
By industry, the performance of automobile and petroleum and petrochemical products is better than that of other industries. The "core shortage" continued to ease, driving the recovery of automobile sales growth. From January to February, automobile retail sales increased by 3.9% year-on-year, which was significantly better than the year-on-year contraction of 7.4% in December last year. Recently, the continuous rise of crude oil prices has driven up the oil price of terminal finished products, pushing up the nominal sales of related oil products. From January to February, the retail sales of petroleum Commodities Limited to units increased by 25.6% year-on-year. Automobile and petroleum commodities have formed a positive pull on the growth of total retail sales of social consumer goods. It is expected that these two subsequent positive contributions to consumption will continue.
Looking ahead, since March, the epidemic has broken out in a scattered manner across the country, dragging down the economic recovery. The higher than expected upward consumer consumption rate from January to February will be frustrated. The impact of recent closure measures on consumption can be measured by referring to the impact of closure in Nanjing, Xi'an and other places in the second half of last year. In the long run, the income growth differentiation of residents affected by the epidemic, the squeeze on corporate profits and the decline in the prosperity of real estate related consumption will put pressure on the recovery of consumption during the year.
V. foresight: the "triple pressure" still exists, and the policy can be made effective
Although China's economy made a better start than expected from January to February, the downward "triple pressure" is still there, and the recent conflict between Russia and Ukraine and the Chinese epidemic have strengthened the supply shock. In the short term, exports are expected to maintain resilience, and the support of manufacturing and infrastructure investment to the economy is expected to improve. However, real estate continues to decline, and consumption is suppressed by the epidemic, which has become the main obstruction in the economy.
Under the guidance of the annual economic growth target of 5.5%, it is expected that the "steady growth" policy will be further strengthened. On March 16, vice premier Liu he presided over a special meeting of the financial stability Commission, emphasizing "effectively invigorating the economy in the first quarter", "actively introducing policies conducive to the market and cautiously introducing contractionary policies", especially requiring "monetary policy should take the initiative to respond and new loans should maintain a moderate growth". With regard to real estate enterprises, the meeting called for "timely" research and put forward "effective" solutions to prevent and resolve risks. This means that monetary policy and real estate policy are likely to show more positive changes in the first quarter.
