Event: in the first quarter of 2022, GDP grew by 4.8% (expected 4.8%), industrial added value increased by 6.5%, social zero by 3.3% and fixed asset investment by 9.3% (expected 8.6%). Among them, infrastructure investment is 10.5%, manufacturing investment is 15.6%, and real estate investment is 0.7%.
I. GDP: in 2022, Q1 GDP rebounded to 4.8% year-on-year, in line with our expectations; The same ratio excluding the base is slightly lower than 2021q4, and the ring ratio is slightly lower than the seasonality before the epidemic, indicating that the economy is still bottoming out.
In a single quarter, the real GDP of Q1 in 2022 increased by 4.8% year-on-year, up 0.8 percentage points from the previous value, that is, it was better than Q4 in 2021; However, if the base effect is excluded, the growth rate is not high, that is, the year-on-year compound growth rate of Q1 GDP in 2022 is 4.9%, slightly lower than 5.2% of the two-year compound growth rate of Q4 in 2021; The quarter on quarter ratio was 1.3%, higher than 0.5% in the same period in 2021, but lower than 1.7% in the same period in 20152019 before the epidemic, indicating that the economy is still bottoming out. By industry, the added value of primary, secondary and tertiary industries changed by - 0.4, 3.3 and - 0.6 percentage points year-on-year to 6.0%, 5.8% and 4.0% respectively; Compared with the two-year compound growth rate in the same period in 2021, the change is 3.7, - 0.2, - 0.6 percentage points. It can be seen that the growth rate of the added value of the tertiary industry fell most significantly, reflecting the impact of the epidemic on the service industry in March. On the income side, the cumulative actual per capita disposable income in Q1 in 2022 was 5.1% year-on-year, slightly higher than the actual GDP growth rate of 4.8%, and the economic income growth gap narrowed further (Q1-Q4 in 2021 was 4.6%, 0.7%, 0.1%, 0% and - 0.3%); The cumulative actual per capita disposable income in urban and rural areas was 4.2% and 6.3% respectively year-on-year. Although the growth gap between urban and rural income rebounded slightly compared with the front, it remained low, and the imbalance between urban and rural areas was not prominent. In terms of income structure, compared with the two-year compound growth rate of 2022q1 and 2021q4, in fact, the growth rate of residents' property income decreased significantly in the first quarter of this year, from 8.4% to 6.1%, which is also the main sub item that drags down the growth rate of residents' nominal income, which may be related to the downturn of real estate and the adjustment of capital market; The wage income of residents is relatively stable. Overall, the year-on-year GDP of Q1 in 2022 is in line with our expectations, and the month on month growth rate is slightly lower than the seasonal range before the epidemic. In the future, we need to continue to pay attention to the disturbance of the epidemic to the tertiary industry and the impact of the real estate and capital markets on Residents' property income, which will further affect the Consumption Willingness and consumption ability of subsequent residents.
II. Production: the year-on-year growth rate of industrial production fell, and the quarter on quarter growth rate was less than seasonal, which was mainly dragged down by downstream consumption and midstream manufacturing; Affected by the impact of the epidemic and the downturn of real estate, the prosperity of the service industry has decreased significantly.
1. The growth rate of industrial production has declined, and the growth rate of downstream consumption and midstream manufacturing has been greatly dragged down, and the quarter on quarter adjustment is still lower than the seasonality.
1) the year-on-year growth rate of industrial production declined, and the quarter on quarter growth rate was lower than that of seasonality. The year-on-year growth rate of industrial added value measures the actual growth rate of industrial production after deducting the influence of price changes. The data showed that the industrial added value increased by 5% year-on-year in March, with a cumulative year-on-year increase of 6.5%, down from 7.5% year-on-year from January to February, and the growth rate of industrial production fell. On a month on month basis, the quarterly growth rate of industrial added value in March was 0.39%, lower than 0.6% in the same period last year and 0.55% of the average value in the same period in the past four years (excluding the abnormal value in 2020), indicating that the month on month growth rate of industrial production is less than seasonal. Overall, the decline in the growth rate of industrial production is mainly affected by the midstream manufacturing and downstream consumer industries, which is related to the disturbance of the epidemic. The cumulative export delivery value fell by only 2.5 percentage points to 14.4% year-on-year, representing that foreign demand is still resilient.
2) by industry, downstream consumption and midstream manufacturing are a big drag, which is related to factors such as cost pressure and epidemic impact. Compared with the same period in March, the upstream industries such as coal mining and washing industry, non-metallic mineral products, ferrous metal smelting and calendering processing industry and non-ferrous metal smelting significantly strengthened in February, which may be related to the increase in the price of upstream raw materials to promote the expansion of production and the pull of infrastructure construction; Correspondingly, the cumulative year-on-year growth rate of coke, ten non-ferrous metals and cement in March was also higher than that in February. The wine, beverage and refined tea manufacturing industry and textile industry in the lower reaches, as well as the metal products industry, general equipment manufacturing industry and automobile manufacturing industry in the middle reaches, have a lot of decline compared with the previous value, which is related to the upward cost of raw materials in the upper reaches and the impact of the epidemic.
2. Affected by the impact of the epidemic and the downturn of real estate sales, the prosperity of the service industry has declined. In March, the service industry production index fell by 0.9% year-on-year, with a cumulative year-on-year rate of 2.5%, down 1.7 percentage points from January to February, which is still lower than that of the service industry in the whole year of last year (the two-year compound growth rate of the service industry production index in 2021 is between 4.4% - 6.7%), which is related to factors such as repeated epidemics and sluggish real estate sales. For example, China's warehousing index fell by 4.4 percentage points to 46.9% in March, The transaction area of commercial housing in 30 large and medium-sized cities was - 47.3% year-on-year (about - 30% from January to February).
III. investment in fixed assets: real estate continued the downward trend, manufacturing investment excluding the base effect was weak, and infrastructure continued to grow steadily.
In the first quarter, fixed asset investment fell by 2.9 percentage points to 9.3% from January to February, with a three-year compound average growth rate of 4.82%, and the improvement rate exceeded market expectations.
1) real estate: the investment is better than expected, and the decline of land acquisition sales is expanding; The relief effect of capital pressure at the financing end is still not obvious; There is room for further development of demand side policies. Specifically: first, the investment side is still depressed. From January to March, the cumulative value of real estate investment fell by 3.0 percentage points to 0.7% compared with the previous value. It is speculated that the dislocation of price factors and land purchase fees has made a great contribution. From the front end, the decline in sales, land acquisition and new construction expanded. From January to March, the sales area of commercial housing was - 13.8% (the former value was - 9.6%), the land purchase area was - 42.3% (the former value was - 41.8%) and the new construction area was - 17.5 (the former value was - 12.2%) year-on-year; At the back end, the completed area fell to - 11.5% year-on-year (the previous value was - 9.8%). It is worth noting that the impact of the epidemic on real estate sales still has aftershocks. Taking the subway passenger volume as a measure of residents' living and consumption radius, the index is about 3 weeks ahead of the transaction area of commercial houses in 30 cities. Last week, the daily average subway passenger volume in 10 cities in China was 15.09 million, down 66% from the high in early March. It is expected that the impact of the epidemic on real estate sales will still be difficult to fully subside in the second quarter.
Second, financing has not been significantly improved. From January to March, the cumulative sources of development funds were - 19.6% year-on-year, and the decline of self raised funds narrowed by 1.4 percentage points to - 4.8%. China's credit, deposit, advance collection and personal mortgage loans continued to decline. At present, the funds at the financing end are biased towards central enterprises and state-owned enterprises, and the overflow of private enterprises is insufficient. In the second quarter, the Chinese dollar bonds of real estate matured intensively, and the risk of default further increased.
Third, the policy side needs further efforts. Since the beginning of spring, more than 70 cities have issued loose real estate policies, mainly in the third and fourth tier cities, and the regulation measures have gradually reflected the comprehensiveness, including the "25" real estate regulation in Yunnan, Lanzhou, Lishui and other cities, but they have not spread to high-energy cities, and the sales - financing - investment chain is difficult to recover in the short term. In the "two weak real estate demand and investment, can affordable housing projects turn the tide?" In, we estimate that the new investment in the three major affordable housing projects in 2022 will be 256.1 billion yuan, driving about 1.74% of the real estate investment. Among them, the negative pull of shed to housing reform can not be ignored, and the policy of "stabilizing real estate" still needs to be further strengthened.
2) manufacturing industry: the high-end manufacturing industry has a high outlook, and the automobile sub item has a large drag. From January to March, manufacturing investment increased by 15.6% year-on-year, with significant base effect. The three-year compound growth rate of manufacturing investment from January to March 2022 was 3.9%, lower than the two-year compound average growth rate of 5.4% in 2021. In terms of industries, such as chemical products, non-ferrous metal smelting and rolling processing industry, metal products industry, electrical machinery, computer communication electronics, pharmaceutical manufacturing, electrical machinery and equipment manufacturing, special equipment manufacturing and other high-end manufacturing performed well. The three-year compound average growth rate was 17.2%, 13.9%, 9.3% and 8.5% respectively. In March, the epidemic in Shanghai and Jilin caused pressure on the automobile industry, The spillover effect caused by the obstruction of terminal production and supply shortage is a great disturbance to the marginal repair of industrial investment and production in the second quarter.
3) infrastructure investment continued to develop, and Q2 still increased. The growth rate of Q1 broad infrastructure was 10.48%, an increase of 1.87 percentage points over 8.61% from January to February 2022, close to the 9% - 10% we predicted in the review of economic data in the beginning of the year; The growth rate of infrastructure (excluding electricity) in the narrow sense was 8.5%, compared with the previous value of 8.1%. Behind the high growth of infrastructure construction is the project carry forward in the fourth quarter of last year, the issuance of special bonds in advance, the active preparation of major key projects in various regions in the first quarter of this year, the improvement of construction in many provinces, and the rapid formation of physical workload driven by multiple factors. By industry, the investment in railway transportation and road transportation is relatively low, and the growth rate of other industries is higher than 8%. Among them, the cumulative investment in the production and supply of electric heating water, water conservancy management, transportation, warehousing and postal industry is 7.6%, 10% and 9.6% respectively year-on-year.
In the first quarter, funds and projects went hand in hand, boosting the continuous development of infrastructure, which confirmed our previous judgment (refer to the report "Why are we optimistic about infrastructure?"). In terms of funds, the overall issuance of special bonds was advanced, and the scale of investment in infrastructure was increased. As of April 18, the total issuance scale of special bonds in 2022 was 131732 billion yuan, of which 461.7 billion yuan was used for special bonds in the field of infrastructure, accounting for 35%; As of November, the total investment in major projects in the province was RMB 12.9 trillion, with a year-on-year growth rate of 2.0% compared with the planned total investment in major projects in the province, which was RMB 12.9 trillion.
Looking back, on March 30, the national standing committee meeting proposed to "deploy and make good use of government bonds, expand effective investment and decide to start a number of new water conservancy projects with mature conditions". On April 6, the national standing committee meeting stressed that "steady growth should be put in a more prominent position", and the certainty of high infrastructure growth was further enhanced. However, in the first quarter, real estate enterprises took land more cautiously and sold more land, which further increased the pressure on local finance. Previously, we estimated that the capital source of infrastructure in 2022 was 5.9%. The capital investment in the second half of the year may be completely opposite to that in 2021, showing "project and other funds". The replenishment of capital sources remains to be observed, suggesting the possibility of issuing "special national debt". It is estimated that the growth rate of Q2 infrastructure in 2022 will fall in the range of 7% - 9%. The rhythm was high before and low after, with an annual growth rate of 5.9%.
IV. consumption and Employment: in March, the multi-point spread of the epidemic and the continuous upgrading of prevention and control dragged down the sub item of consumption. The unemployment rate has maintained an upward trend. At present, the inflection point of the epidemic in China has initially appeared. In the follow-up, we still need to closely cooperate with the policies of promoting consumption and stabilizing people's livelihood, so as to boost residents' confidence and release consumption potential.
1) in terms of consumption, affected by the epidemic, the cumulative social zero in March fell to 3.3 year-on-year, 3.4 percentage points lower than the previous value, and - 3.5% year-on-year, 10.2 percentage points lower than the previous value. In terms of industry, mandatory consumption performed well, and the post real estate cycle was severely damaged. Petroleum products, beverages, tobacco and alcohol, office supplies, grain and oil increased by 19.7%, 11.8%, 11.8%, 10.6% and 9.3% year-on-year. Household appliances, building decoration, automobiles and furniture decreased by 6.8, 2.4, 4.2 and 1.1 percentage points compared with the previous value. In March, the epidemic spread rapidly, showing the characteristics of multiple points, wide range and frequent occurrence. The prevention and control measures under the dynamic clearing policy continued to upgrade, which dragged down the activities of consumption and service industry. On the one hand, the spread of the epidemic inhibited residents' consumption desire and passively increased the proportion of Preventive Savings, which was reflected in the change of consumption and savings willingness in the questionnaire survey of urban depositors by the central bank in the first quarter. Compared with the previous quarter, the Consumption Willingness decreased by 1.0 percentage points to 23.7%, and the savings willingness increased by 2.9 percentage points to 54.7%; On the other hand, the radius of residents' life and consumption has been tightened and narrowed by prevention and control, resulting in some consumer demand can not be met, and the contact consumption relying on offline real scenes has been directly impacted. Looking back, on April 13, the national Standing Committee stressed that "we should deploy consumption promotion measures to promote the consumption of services such as medical and health care, elderly care and childcare, and support the consumption of new energy vehicles and the construction of charging piles". At present, the inflection point of the epidemic has initially emerged. In the future, policies to promote consumption and stabilize people's livelihood are expected to cooperate closely and make concerted efforts to stabilize the main body of the consumer service market, and comprehensively implement policies to boost residents' confidence and release consumption potential.
2) in terms of employment, the urban survey unemployment rate has increased by 0.3 percentage points to 5.8% compared with the previous value, which is higher than the annual unemployment rate center of 5.5%. The survey unemployment rate of employed persons aged 25-59 has increased by 0.4 percentage points to 5.2%. Both indicators have been upward pointing to the current severe employment situation for five consecutive months, and the unemployment rate may continue to be higher than the target in the second quarter. According to the data of the Bureau of statistics, China's urban labor force increased by about 16 million this year, a new high for many years. The root of stable employment lies in stable growth. The disturbance of the epidemic and employment challenges point to the sustained force of stable growth.
Risk tips
Monetary policy tightened more than expected, the downward speed of real estate was faster than expected, and the implementation of the policy was less than expected.
