To consolidate the economic recovery, we need to focus on expanding demand
On July 31, data released by the National Bureau of Statistics showed that the manufacturing purchasing managers' index (PMI) in July was 49.0 percent, down 1.2 percentage points from the previous month, which is below the critical point. The non-manufacturing business activity index and the composite PMI output index were 53.8% and 52.5%, respectively, down 0.9 and 1.6 percentage points from the previous month, and in expansion territory for two consecutive months. On the whole, China's economic boom level has fallen, the recovery of the foundation needs to be stable.
Plant letter macro investment research institute, a senior researcher at luo huan jieren, said repeatedly by the outbreak, superposition of seasonal factors such as traditional production off-season and insufficient market demand release from the combined impact of manufacturing PMI fell in July, among them, the production and new orders index fell 3.0 month and 1.9% respectively, the current policy can spend more time still need to boost demand. At the same time, the manufacturing PMI still showed positive factors. For example, the price index fell significantly, indicating that the price stabilization policy had a significant effect. The expected index of production and business activities is in the expansion range, indicating that the confidence of market players has recovered.
CAI Jin, vice president of the China Federation of Logistics and Purchasing, said the index of new orders in the manufacturing sector dropped below 50 percent in July, and the proportion of enterprises reflecting insufficient market demand remained above 50 percent. In the second half of the year, we should take active actions to expand demand, continue to focus on expanding investment, promoting consumption and stabilizing employment, and strengthen the internal driving force for economic recovery.
The PMI fell into contractionary territory
In July, the manufacturing PMI fell to 49.0% due to factors such as the slow season of traditional production, insufficient release of market demand and low prosperity of energy-intensive industries.
In July, the production index and the new orders index were 49.8 percent and 48.5 percent, respectively, down 3.0 and 1.9 percentage points from the previous month, both in the contraction range. The survey results show that the proportion of enterprises reflecting the lack of market demand has increased for four consecutive months and exceeded 50% this month. The lack of market demand is the main difficulty facing the current manufacturing enterprises, and the recovery foundation of the manufacturing industry still needs to be stable.
Wang Qing, chief macro analyst of Orient Jincheng, said that the downward range of the production index in July was larger than seasonal, mainly caused by the sporadic impact of the epidemic. The low new orders index, in addition to the short-term impact of the pandemic, is mainly behind the current consumption and investment demand is weak, the former is mainly related to the consumption power and confidence of residents to further boost, the latter indicates that the impact of the real estate market on investment is still.
Due to the lack of momentum for the recovery of demand in the domestic market and a more complex and severe external environment, manufacturing enterprises' expectations for production and business activities have also fallen back. In July, the expected index of production and business activities was 52.0%, down 3.2 percentage points from the previous month. In terms of industry conditions, textile industry, oil, coal and other fuel processing industry and ferrous metal smelting and rolling processing industry were all in the contraction range for four consecutive months.
It is worth noting that, influenced by the price fluctuations of oil, coal, iron ore and other international commodities, the purchase price index of major raw materials and the factory-gate price index were 40.4 percent and 40.1 percent, respectively, down 11.6 percentage points and 6.2 percentage points from the previous month. Among them, ferrous metal smelting and rolling processing industry are the lowest among the surveyed industries, and raw material purchase prices and product ex-factory prices have fallen significantly. "This means that the raw material cost pressure, which previously plagued middle and downstream enterprises, is weakening, helping domestic prices to remain stable in the second half of the year." Wang Qing said.
The contact service sector improved and the non-manufacturing sector continued to recover
In July, the non-manufacturing business activity index was 53.8%, down from 0.9 percentage point in the previous month, and the non-manufacturing sector recovered growth for the second consecutive month. Wu Wei, an analyst with China Logistics Information Center, believes that as the effect of government support policies continues to release and the impact of the epidemic weakens, non-manufacturing business activities continue to maintain a good recovery pace. Employment is relatively stable, cost pressures on enterprises are moderating, investment-related activities continue to improve, the circulation of goods tends to be smooth, and the recovery of contact services continues to pick up speed.
By sector, the business activity index of the service sector in July was 52.8 percent, down 1.5 percentage points from the previous month, remaining in the expansion range, indicating that the service sector continued to recover under the support of a series of policies and measures to stabilize growth and promote consumption.
In particular, the contact service sector continued to improve. The data showed that 16 of the 21 industries surveyed had business activity indices in the expansion zone, with air transport, accommodation, catering, ecological protection and public facilities management above 60.0%. In terms of market expectations, the expected index of business activity in the service sector was 58.8%, and the business activity expectation index of all industries surveyed remained above the critical point for two consecutive months.
In the construction sector, the index of business activity in the construction sector rose to 59.2% in July, up from 2.6 points in the previous month. "The construction boom is mainly related to the acceleration of infrastructure investment. "The new special bond quota issued in June needs to be used up by the end of August, so infrastructure investment has accelerated everywhere." Industry experts said.