Original title: Wang Han et al.: The production end of the manufacturing industry shows a trend of volume increase and price decrease

China New Economic and Social Commission, December 1 (Xinhua): The manufacturing industry production side shows a trend of volume increase and price decrease

Author: Wang Han, Managing Director and Chief Economist of Industrial Securities (10.010, -0.27, -2.63%)

Lu Yanjin Senior Macroeconomic Analyst of Industrial Securities

Wang Xiaoxiao, macroeconomic analyst of Industrial Securities

According to the data released by the National Bureau of Statistics, the manufacturing PMI (China Manufacturing Purchasing Manager Index) in November was 50.1%, up 0.9 percentage points from the previous month, and returned to the expansion range; Non-manufacturing PMI was 52.3%, down 0.1 percentage points from the previous month.

The effect of ensuring supply and stabilizing price was obvious, and the production volume of manufacturing increased and the price decreased. In November, the manufacturing PMI rebounded and returned to the expansion range after being below the critical value for two consecutive months. Among the five sub-items, the production index rose by 3.6 percentage points from the previous month, the raw material inventory index and the new order index rose by 0.7 and 0.6 percentage points respectively, the employee index rose by 0.1 percentage points, and the supplier delivery time index rose by 1.5 percentage points. On the whole, the sharp recovery of production in November is the biggest source of power for the recovery of manufacturing PMI. The stock of finished products and raw materials has rebounded, and the stock of finished products has rebounded more. The purchase and factory prices have both declined significantly, reflecting the effect of a series of policies to ensure supply and stabilize prices recently issued, and the manufacturing production side has significantly improved, showing a trend of volume increase and price decrease.

In terms of supply and demand, production has improved significantly, demand has rebounded but is still weak, and external demand has improved more than domestic demand. From September to October, the production index was in the contraction range for two consecutive months. In November, the production index significantly improved by 3.6 percentage points, and returned to the expansion range, supporting the significant improvement of the PMI index. In November, the new order index rose by 0.6 percentage points and the new export order index rose by 1.9 percentage points, but the two major order indexes were still in the contraction range, and the improvement of external demand was greater than that of domestic demand. Therefore, although the demand side improved, it was still weak. On the whole, the improvement of production in November was greater than that of demand, and the gap between supply and demand may be converging.

In terms of price, both the purchase price index and the ex-factory price index of raw materials fell sharply, and the price pressure eased. In November, the introduction of policies and measures to guarantee supply and stabilize prices had two levels of impact on prices: first, the recovery of production under the measures to guarantee supply and demand led to the convergence of the gap between supply and demand, forming a downward force on prices; Second, the price stabilization measures were increased, and the commodity prices represented by coal showed a significant correction. Affected by the above, the purchase price index of raw materials and the ex-factory price index decreased by 19.2 and 12.2 percentage points respectively in November. The purchase price index of raw materials fell more sharply, the gap between purchase and ex-factory prices converged, and the price squeeze faced by enterprises improved.

At the inventory level, the improvement of finished product inventory is greater than that of raw material inventory, which also reflects the logic of production improvement. On the one hand, under the influence of improved production and lower purchase prices, enterprises replenish raw materials, making the inventory of raw materials improve; On the other hand, when the production is greatly improved, the improvement of demand is weaker than that of production, which makes the replenishment of finished goods inventory more significant.

At the level of external demand, the subsequent price factors may weaken the support for exports.

At present, the PMI index reflects that the impact of maintaining supply and stabilizing prices is apparent, the production pressure is relieved, the supply is restored, and the price pressure is reduced. It should be noted that although the new order index has improved, it is still below the critical value, and is mainly supported by the improvement of new export orders. In addition, the non-manufacturing business activity index is also slightly lower than last month, reflecting that the recovery trend of domestic demand is still weak. In addition to the repeated local epidemic in recent years, or still restricting the recovery of residents' income expectations and consumption will, we must be vigilant about the sustainability of domestic demand constraints. (Zhongxin Jingwei APP)

All rights reserved by Zhongxin Jingwei. Without written authorization, no unit or individual may reprint, extract or use in other ways. This article does not represent the views of China and New Zealand.