China’s manufacturing demand is insufficient and the purchasing managers’ index falls quarter by quarter
The downward trend is obvious quarter by quarter
Judging from the PMI index, the average value in the first ten months of this year was 53.0%, 2.2 percentage points lower than the average level in the same period last year. The index has an obvious downward trend quarter by quarter, with the average in the first quarter being 54.9%, falling to 54.8% in the second quarter, and 49.3% in the third quarter.
Zhang Liqun, a researcher at the Macroeconomic Research Department of the Development Research Center of the State Council, believes: “The changes in the PMI index in October may indicate that the economic growth rate will continue to correct.”
Zhang Liqun analyzed that the PMI index once rebounded to slightly 50% in September. High, but judging from the changes in PMI in October, the correction in economic growth in the third quarter was not due to short-term factors such as the suspension of production by some companies during the Olympics, but the result of the combined impact of policy control and changes in the external environment. He said that after July, macroeconomic policies have shifted from the goal of dual prevention to one protection and one control. In the near future, the task of maintaining growth has become increasingly prominent, and policy adjustments have become relatively intensive. It is expected that China’s economy will not undergo a deep correction and will gradually stabilize in the future.
“In October, both the China Federation of Logistics and Purchasing PMI and CLSA China PMI index fell to the lowest level since their inception, and most sub-indexes dropped significantly, indicating that the economic growth correction has not yet reached the end.” Senior Macro Analyst at Southwest Securities Dong Xian’an said that interest rates should be further lowered significantly in line with international trends, and at the same time, active fiscal policies should be adopted and a comprehensive tax reduction plan should be introduced to stabilize economic growth expectations and avoid economic ups and downs.
As an internationally accepted index reflecting macroeconomic trends, the manufacturing PMI is weighted by five major diffusion indices. Data show that in China’s manufacturing PMI index system this month, except for the finished product inventory index which rose slightly and the supplier delivery time index which remained flat, the other indexes fell by more than 6 percentage points year-on-year, including the purchase price index, production The index, new orders index and purchase volume index fell by 12.4, 10.3, 9.6 and 8.4 percentage points. Except for the finished product inventory index and the supplier delivery time index which are higher than 50%, the other indices are all within 50%.
Inadequate manufacturing demand
Data show that the inventory index of finished goods has continued to rise since July. In September, it rose to more than 50% for the first time in the past three years. In October, it rose another 0.9 percentage points to 51.4%.
Among the 20 industries, 9 industries currently have a finished product inventory index higher than 50%. Some industries such as chemical fiber manufacturing and rubber (information, market) plastic products industry, petroleum processing and coking industry, ferrous metal smelting and rolling processing Industry, papermaking and printing, cultural, educational and sporting goods manufacturing, non-ferrous metal smelting and rolling processing industries even reach more than 60%.
Experts from the China Federation of Logistics and Purchasing analyzed that the inventory index of finished goods continues to rise and has reached more than 50% for two consecutive months, which may indicate insufficient demand in the manufacturing industry, unsalable products, and prominent inventory backlogs.
Dong Xian’an said that changes in the inventory index of finished goods indicate that the inventory pressure faced by industries such as steel, automobiles, and textiles continues to increase, and related companies are also facing the risk of inventory losses caused by falling prices.
The manufacturing employment index was 47.0%, down 3.3 percentage points from the previous month and hitting a three-year low. Over the past three years, the PMI manufacturing employment index has mostly remained above 50%. Experts from the China Federation of Logistics and Purchasing analyzed that the manufacturing employment index in October was significantly lower than 50%, which may indicate that the current manufacturing demand is declining and production is slowing down, which has had a greater impact on employment.
In addition, the new orders index fell, indicating insufficient social demand. The new orders index, which reflects demand, averaged 54.7% in the first ten months of this year, down 4.7 percentage points year-on-year. Among them, the average in the first quarter was 58.6%, fell back to 57.6% in the second quarter, and dropped sharply to 47.8% in the third quarter.
The new export orders index, which reflects the export trend, fell even more significantly. In the first ten months of this year, the export order index in each month was below the level of the same period last year, with an average of only 51.8%, which was nearly 5 percentage points lower than the same period last year.
Inflation pressure is gradually easing
In the PMI index system, the purchase price index reflects the rising and falling trends in raw material prices from the perspective of enterprises.
In the first half of the year, the index reached above 70% in every month except January, with an average of 72.9%. In the second half of the year, the decline continued, and the decline has accelerated since August, with the decline reaching more than 10 percentage points.
Data show that the purchase price index dropped to 32.3% in October, a drop of 33.8 percentage points year-on-year. It fell 12.4 percentage points from the previous month, falling significantly for four consecutive months.
Among the 20 industries, except for the clothing, shoe and hat manufacturing industry, fur and down products industry, and tobacco products industry, which are higher than 50%, and the pharmaceutical manufacturing industry is at the critical point of 50%, the remaining 17 industries are all below 50%. .
In response to the changes in the purchase price index, experts from the China Federation of Logistics and Purchasing analyzed that the inflationary pressure that has plagued our country for nearly two years is gradually easing in the second half of this year.
In this regard, Dong Xian’an said that the changes in the purchase price index further verified that my country’s short-term inflationary pressure has been relieved. At the same time, we must also be wary of possible deflation risks. AASVSGRUTO
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