Industrial production is relatively resilient. In March, the industrial added value increased by 5% year-on-year, slightly lower than the market expectation. The impact of the epidemic on industrial production initially appeared. However, compared with the demand side, the production side showed some toughness. Industrial production has the following structural characteristics: first, upstream production is relatively better. China continued to promote supply and price stability, and the production capacity of upstream energy and raw materials was released. And the recent rise in commodity prices has boosted the production willingness of upstream enterprises. The manufacturing industry is down due to the weak supply and demand caused by the impact of the epidemic. Second, industries with long supply chains have been seriously impacted by the epidemic, such as automobile, semiconductor and other industries. In April, the epidemic situation in China is still serious, and with the consumption of inventory, the production of relevant industries will face greater pressure. Third, high-tech manufacturing still performs well, which is an important factor driving industrial production. The added value of high-tech manufacturing industry has accounted for 15.1% of the added value of industries above designated size. Because the high-tech industry lacks corresponding high-frequency index tracking, it is often ignored by market analysis. In recent years, its corresponding policy support has been strong and growing rapidly, and the volume of production and investment in high-tech industries has taken a large proportion in the economy, so it may be the source of many poor expectations.
Consumption has been seriously impacted by the epidemic. In March, the social zero growth rate fell sharply and was far lower than the market expectation, mainly due to the lack of consumption scenes caused by the rebound of the epidemic in many places and the subsequent closure. Structurally, the categories related to outbound consumption have fallen precipitously. The decline in the prosperity of the real estate industry has further weakened the consumption related to the post real estate cycle. The closure of the epidemic has also affected the residents' demand for cars, but the required consumption has not decreased but increased. In April, the closure and control of the epidemic situation across the country is still strict, and the impact on consumption is expected to be no less than that in March. Considering the increasing difficulty of epidemic prevention and control and the possibility of recurrence in the future, the power of consumption recovery this year is insufficient and the overall performance will be weak. The investment is relatively strong. From January to March, the total fixed asset investment increased by 9.3% year-on-year, and the year-on-year growth rate in March was 7.1%. The excellent performance of the investment side partially hedged the decline in consumption and played a decisive role in supporting the total demand. Infrastructure investment continued to rise. The year-on-year decline in the output of industrial products such as cement, pig iron, crude steel, steel and non-ferrous metals also narrowed, reflecting the improvement in the marginal supply and demand related to infrastructure. At the same time, we believe that there is no contradiction between the year-on-year negative increase in the output of these products and the year-on-year positive increase in infrastructure. First, the output is not equal to the consumption, and there is also the inventory factor. Second, the consumption is not equal to the investment, and there is also a price factor. We believe that infrastructure investment can maintain a high growth rate in the first half of the year, especially after the epidemic is stable, more projects may start. The margin of investment in manufacturing fell. The pro cyclical characteristics of manufacturing investment are more obvious. Under the condition of weak consumption and real estate investment, the expectations of manufacturing enterprises are difficult to improve significantly. In addition, the supply chain obstacles caused by the epidemic are also an important reason to suppress the investment willingness of many industries.
However, with strong policy support, investment in high-end manufacturing and green economy will have a better relative performance.
Real estate investment turned negative again, but by a small margin. From January to March, the accumulated real estate investment increased by 0.7% year-on-year, and we calculate that it decreased by 2.4% year-on-year in March. Why is the decline of real estate investment relatively small when the prosperity of the real estate industry declines sharply? Because the growth rate of real estate investment is mainly related to the growth rate of construction area. So why can the construction area still grow when the new construction starts decline sharply? First, the growth rate of construction area and newly started and completed area is not directly related to the difference between them. Although the newly started and completed areas are declining year-on-year, the difference between the two is still positive. Second, the requirements of governments at all levels for "guaranteed delivery" of real estate enterprises have prompted more projects that had been shut down to restart. In fact, although the growth rate of newly started and completed areas fluctuated greatly, there has never been a year-on-year negative growth in housing construction area in history. Corresponding to the real estate investment, there is little year-on-year negative growth. In terms of demand, the epidemic has led to increased sealing and control in many places, especially in some first tier cities, which has seriously affected residents' house viewing and buying. The year-on-year decline in the sales area of commercial housing of the Bureau of statistics is still far lower than the decline in the sales of the top 100 real estate enterprises of the central index Institute, and also lower than the decline in the trading area of commercial housing in 30 large and medium-sized cities. First, the caliber of the Bureau of statistics includes affordable housing. Second, the sales of some leading enterprises involved in the current credit crisis of real estate enterprises have fallen sharply, which has a great impact on the sales data of commercial housing in the top 100 real estate enterprises and large and medium-sized cities. On the contrary, local real estate enterprises in small cities have performed relatively well because of their low leverage ratio, and the recent price reduction and promotion efforts in small towns have been stronger. Therefore, the national sales data of the Bureau of statistics is higher than that of large real estate enterprises and big cities. The funds in place of real estate enterprises continued to decline. At present, real estate enterprises are facing two difficulties: one is that banks are still reluctant to lend to real estate enterprises, and the other is that the cash flow impact caused by the decline of demand side is becoming greater and greater.
The employment problem cannot be ignored. In March, the urban unemployment rate rose to 5.8% higher than expected. The pressure of the economic downturn on the job market can not be ignored. Moreover, it can be seen from the data structure that the current employment pressure is mainly concentrated on college graduates, which will have a greater negative impact on social efficiency and stability. In the urban survey unemployment rate, the unemployment rate of the registered residence population in March was 6.3%, an increase of 0.7 percentage points compared with February, and the unemployment rate of the local registered residence population increased by only 0.1 percentage points to 5.6%. Meanwhile, registered residence registered residence registered population has an unemployment rate of 5.9%, which means that the unemployment rate of non registered residence registered residence is higher. There are more graduates and even college graduates in this group of people, which means that graduates' employment is more difficult. On the other hand, the survey unemployment rate of the population aged 16-24 in March was 16%, much higher than the normal seasonal level. This group includes a large number of graduates, and the rapid increase of unemployment rate also means that it is difficult for graduates to find a job. Premier Li Keqiang previously mentioned on several occasions that employment priority is a macro policy, and other policies should be matched. At present, the pressure in the employment market, especially the employment difficulty of graduates, requires more policies to stabilize the macro-economy.
The steady growth policy needs to be strengthened. We believe that although there are unexpected impacts such as geopolitics and epidemic, the 5.5% growth target will not be easily abandoned, because abandoning the growth target means greater employment pressure, which is the bottom line of the policy. The actual GDP in the first quarter was 4.8% year-on-year. In order to achieve the annual target of 5.5%, it is necessary to achieve an average GDP growth rate of 5.7% in the next three quarters. Considering that the second quarter is still seriously affected by the epidemic, assuming that the actual GDP growth in the second quarter is 5% year-on-year, the GDP growth rate in the second half of the year needs to reach 6%. It is not easy to achieve this goal. We believe that the macro environment of this year may be similar to that of 2020. Investment force + structural relief and insurance are the leading direction of the policy. The first is the shift of macro Prudential policy, mainly real estate policy regulation. In order to withstand the downward pressure of the economy, the real estate market needs to recover faster. In the future, it is necessary to further guide the decline of mortgage interest rate. At present, the average mortgage interest rate is still close to 50bp higher than the five-year LPR, and there is still room for decline. At the same time, we need to alleviate the cash flow crisis of real estate enterprises to a certain extent. The second is the strengthening of fiscal policy. We need to increase investment in infrastructure and provide necessary assistance to troubled enterprises. The third is monetary policy. At present, the pulling force of monetary policy on the economy is limited, because it can not solve the problem of lack of consumption scenario, nor can it effectively improve economic expectations and promote enterprise investment. Its main function is to reduce the financing cost of enterprises in order to keep the main body of the market. We believe that there is little room for loose monetary policy in the future, and there is a possibility of a slight reduction in LPR, but more "water release" should not be expected.
Risk tip: the rebound of the epidemic is higher than expected, and the strength of steady growth policy is insufficient.