The hottest May PMI approaches the low and prosper

2022-10-20
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In May, the PMI approached the boom and bust line, and the expectation of interest rate reduction was enhanced. Introduction: in May, the PMI did not continue the rising trend of the previous five consecutive months, but fell sharply near the boom and bust line, causing the market to worry about economic growth. The China Federation of logistics and purchasing (hereinafter referred to as CFLP) and the service industry survey center of the National Bureau of statistics released a PMI of 50.4% in May, down 2.9% from April

in May, PMI did not continue the rising trend of the previous five consecutive months, but fell sharply near the boom and bust line, causing the market to worry about economic growth

the PMI in May released by the China Federation of logistics and purchasing (hereinafter referred to as CFLP) and the service industry survey center of the National Bureau of statistics on June 1 was 50.4%, which was 2.9 percentage points lower than that of 3. The displacement of the oil cylinder measured by the specially designed direct angular position converter combined with high-resolution photoelectric encoder and subdivision electrical appliances in April. The final value of HSBC PMI released on the same day was only 48.4%, not only lower than 49.3% in April, but also lower than the initial value of PMI in May

quhongbin, chief economist of HSBC China and co head of Economic Research Asia Pacific region, told that the final value of PMI last month confirmed the weakness of domestic and foreign demand. Affected by this, the growth rate of the manufacturing industry further slowed down, indicating that the real economic growth in the second quarter was still cooling

cflp suggests that monetary policy should be changed from quantity based to price based, focusing on reducing enterprise financing costs by appropriately adjusting loan interest rates and differentiated interest rate policies. A number of experts interviewed also believed that the possibility of interest rate reduction increased this year, and the interest rate will be reduced as early as June

the downward trend of the economy is obvious

compared with April, the 11 sub indexes of the official PMI decreased to varying degrees, except for the increase in the inventory index of finished products. Among them, the production index, new order index and backlog order index fell by more than 4 percentage points; The employees' index and supplier delivery time index fell slightly, within 1 percentage point

insufficient demand has become the biggest resistance to economic growth. In May, the new order index of China's manufacturing industry was 49.8%, down 4.7 percentage points from April. The index of new export orders was 50.4%, 1.8 percentage points lower than that in April. Both indexes are the lows since this year, and the index of new orders has also fallen below the boom and bust line

in terms of enterprise inventory, the inventory index of finished products increased by 2.7 percentage points month on month, reaching 52.2%, the highest since December last year

Haitong international securities issued a report that the PMI fell sharply to 50.4%, ending the five-month rise, which is basically in line with the market's expectation that the manufacturing industry will continue to face difficulties. As the macro data in April maintained that the speed valve was properly adjusted according to the loading speed, and the loading continued to weaken, as well as the uncertainty of the global macro environment, the decline of PMI in May was completely within expectations

cflp special analyst Zhang Liqun also judged that the PMI index fell significantly in May, which is consistent with the trend of economic growth rate falling. The new order index fell significantly, indicating that the operating rate of enterprises may be further reduced in the future, and the economic growth rate may continue to fall

another driving force for the future economic downturn is seasonal factors. Pengwensheng, chief economist of CICC, said that the manufacturing industry entered the off-season from May to July. In particular, the PMI index in May was lower than that in April without exception in the past seven years, with an average decline of 2.7 percentage points

data increase the room for policy relaxation

since the middle and late May, the tone of national macro-control has shifted to "steady growth". Mizuho Securities said that the current economy is still in the midst of the global financial crisis, especially the euro is at a critical moment of life and death. The stage of domestic economic development determines that investment is still the key to "stable growth". It is a natural choice to relax policies to deal with the economic downturn

zhangzhiwei, chief economist of Nomura Securities, told that the decline of PMI index would give greater impetus to the decision-making level to continue to implement the easing policy. The government should take actions on the financial side as soon as possible, including increasing infrastructure construction and accelerating the construction progress of affordable housing

Shen Jianguang, chief economist of Mizuho Securities, told that in order to achieve the goal of "stable growth", policies need to be increased. Investment in real estate and local government financing platforms is the pillar of fixed asset investment. In terms of future real estate policies, we should not only control the speculative demand for investment, but also vigorously support the investment in small and medium-sized rigid housing and affordable housing

however, while maintaining moderate investment and stabilizing demand growth, we should also control the rapid release of supply. The gap between production index and inventory index widened to 3.1 percentage points in May. The contradiction between insufficient demand and excessive supply growth has made the economic situation more entangled

in many exchanges with, Wang Jian, Secretary General of the China macroeconomic society, also repeatedly warned that investment should not be directed to industries that cannot produce benefits at all, which is likely to lead to the decline of medium - and long-term economic growth momentum, and the lessons of the "four trillion" in 2008 should be learned

the voice of interest rate cut rises again

after the PMI data was freshly released, the voice of interest rate cut gradually increased

compared with the relaxation of policies at the industrial and fiscal levels, the use of monetary policy tools to regulate the economy not only has rapid results, but also can stabilize market confidence and expectations

even CFLP, which has always been cautious about regulation suggestions, made it clear this time that monetary policy should change from quantitative to price type, focusing on reducing enterprise financing costs by appropriately adjusting loan interest and differentiated interest rate policies

PENG Wensheng also believes that the central bank still needs to reduce the deposit reserve ratio 2-3 times throughout the year to offset the impact of the decline in foreign exchange, and the reduction of the benchmark lending rate in the short term is a high probability event

the current price situation has also created relatively favorable conditions for the reduction of reserve requirements and interest rates. The purchase price index in PMI in May was 44.8%, a sharp drop of 10 percentage points from the previous month, indicating that the price rise of upstream products has slowed down significantly, and the index has fallen to the lowest point in the last six months, which is conducive to further easing the pressure of CPI rise

"we believe that the central bank will reduce the deposit reserve ratio by 50 basis points again in June." Zhang Zhiwei said that the possibility of interest rate reduction has now risen to 30%. If the CPI can fall below 3%, the probability of interest rate reduction will increase

however, analysts also have different views on whether the heavy fist of interest rate reduction can be started

according to some bank analysts, the strength of policy easing also depends on the development of the European debt crisis. If Greece eventually stays in the euro zone, China may also reduce the deposit reserve ratio three times and cut interest rates one to two times; If Greece withdraws from the euro zone, the policy relaxation will be greater, and the deposit reserve ratio may be reduced 4-5 times, and interest rates may be reduced 2-3 times

in Shen Jianguang's view, the possibility of short-term interest rate reduction is not great, mainly because the negative interest rate has eased, but it is unstable; Liquidity has improved, and the loan execution interest rate has decreased substantially

as for the asymmetric interest rate cut widely called for by the market, Shen Jianguang believes that this window of bad design stress has greatly narrowed the bank, which is not conducive to boosting the confidence of the stock market. We can consider appropriately allowing the loan interest rate to increase from 10% to 20%, which can not only achieve the effect of similar loan interest rate floating down, but also an active attempt to promote the marketization of interest rates

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