April PPI innovation low CPI increase expansion of manufacturing continues to be weak

On May 9, the National Bureau of Statistics released data showing that China's industrial producers' factory price (PPI) fell by 2.6% in April, a decline that exceeded market expectations. The data also hit a new low since November last year. At the same time, the Consumer Price Index (CPI) released slightly increased from the previous month, with a year-on-year growth rate of 2.4%. The current CPI data shows that inflationary pressure is not large, while the PPI's oversold indicates that the economic momentum is insufficient.

Lianxun Securities macro and fixed income senior analyst told the "Daily Economic News" reporter, the PPI ratio has dropped significantly, basically can confirm that the first phase of PPI is nearing the end, and whether there will be a second-stage cost-driven rise, See if the late CPI has exceeded expectations.

PPI oversold shows that the economy is cold

After a short-term decline in the fourth quarter of last year and the first quarter of this year, the PPI in April was -0.6%, and this month's hike factor -2.48% was the lowest since 2010, down about 0.2 percentage points from March. In April, the PPI dropped sharply to 2.6%.

From the perspective of the whole cycle, China's PPI has been negative for 14 consecutive months. In April, the PMI purchase price index was 40.1, which was 10.3 percentage points lower than that in March. It fell for three consecutive months, which means that the PPI will continue to weaken in the short term. .

Zuo Xiaolei, managing director and chief executive of Galaxy Securities, told the reporter of “Daily Economic News” that the PPI continued to be negative. This is not a good phenomenon, indicating that the upstream raw material processing enterprises have no profit, which is not very important to increase their investment willingness. Favorable, but the increase in the monthly PPI decline does not indicate a change in the trend. “The decline in national commodity prices has brought input-type effects to the prices of Chinese production materials. The production capacity of some industries is still in the process of adjustment, especially in some upstream industries.”

Zhu Haibin, chief economist at JPMorgan China, also shared the same view. He said that the domestic manufacturing industry continued to slump. The production capacity of some key industries is seriously over-capacity, and the inventory has returned to historical highs, which has exerted downward pressure on producer prices. On the export side, global commodity prices have continued to decline in recent months.

"With the possible rise in oil prices, commodities and raw material prices in the later period, coupled with the release of effective investment such as domestic railways and the gradual emergence of reform dividends, I believe that PPI will gradually turn positive, but this requires a process." Lei said that in the long run, the industrial structure needs to be adjusted, and it needs to shift from manufacturing to service industry. For backward production industries, there is no need to support them because of their losses.

At the same time, the Bank of Communications report pointed out that “As the PPI hikes factor will enter the recovery channel in May, the PPI decline will be moderated in the short term, but the substantial rebound will still depend on the continuous boost of domestic and international demand. International oil price changes."

CPI or will moderate in the upward

Compared with PPI, China's consumer price index rose more moderately. According to the National Bureau of Statistics, in the year-on-year increase of 2.4% CPI in April, the new price increase factor and the hike factor were 1.4 and 1.0 percentage points, respectively, an increase of 0.2 from March. And 0.1 percentage points, the total increase of 0.3 percentage points, affecting the year-on-year increase in CPI in April. The increase in new price increases in April is closely related to the increase in the price of fresh vegetables.

Yang Wei? said that although the food price was oversold in March, the repairs rose in April, but the increase was still low. In addition, the non-food prices fell year-on-year, and the consumer prices also fell. Pull the power. In addition to the cyclical weakening effect of the supply bottleneck mitigation, H7N9 avian flu also has an impact on the consumption structure, which in turn leads to further decline in meat prices.

China's price level is low, but PPI shows weak economic demand, while economies such as South Korea, Australia and the European Union have cut interest rates to stimulate the economy. Sun Lijian, deputy dean of the School of Economics of Fudan University, believes that the rebound in CPI does not mean that the demand for real economy is rising. It is expected that the window of interest rate cuts in China will soon open.

However, there are also different views. "The rebound in inflationary pressure will make China not relax monetary policy. Due to factors such as the base, China's CPI will continue to rise in the next few months. It is expected that CPI will reach 2.7% in May and climb in June. To 2.9%.” Zhang Zhiwei, chief economist of Nomura Securities, told the Daily Economic News that as the inflation level approaches the one-year deposit rate, the rate cut window will not open.

“The central bank will adhere to the neutral monetary policy stance and will keep interest rates and deposit rates unchanged during the year. The focus of monetary policy operations will be to manage liquidity in the financial system,” Zhu Haibin said.

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