Manufacturing New Year is expected to heat up with a weak start

Abstract As the initial value of HSBC's manufacturing PMI fell to 49.6 below the line, the manufacturing activity started in 2014 with a weak start. Analysts pointed out that although the current stable economic situation has not been reversed, the economy is facing downward pressure. Future policies should be tilted towards steady growth,...
With the initial value of HSBC's manufacturing PMI falling to 49.6 below the line, the manufacturing activity started in 2014 with a weak start. Analysts pointed out that although the current stable economic situation has not been reversed, the economy is facing downward pressure. Future policies should be tilted towards steady growth to avoid repeating the slowdown in economic growth in the first half of last year.

HSBC announced on the 23rd that the initial value of HSBC China's manufacturing PMI was 49.6 in January, down 0.9 percentage points from the final value of the previous month, falling below the 50-point gap and hitting a six-month low.

In the sub-indices, both the new orders and the new export index fell below the line of glory, with the new order index at 49.8, the lowest in six months; the output index slightly falling back to a three-month low; the employment index also fell to The six-month low was in the shrinking region for the third consecutive month; the output price index fell sharply by 4.4 percentage points, indicating that the manufacturing sector is highly competitive.

"In January, the initial value of HSBC PMI slipped into a small shrinkage area, mainly due to the coldening of the domestic demand environment, suggesting that the manufacturing expansion momentum has slowed down and has already hit employment," said Qu Hongbin, chief economist at HSBC Greater China.

Qu Hongbin believes that the current PMI and industrial production growth rate is still slightly better than the second quarter of last year, indicating that the momentum of the economic trend in the past two quarters has not been reversed, but the downside risks have emerged.

Zhang Liqun, a macroeconomic researcher at the National Research Center, also told the Shanghai Securities Journal that the current foundation for economic growth is still not stable, and downward pressure cannot be ignored.

Given that inflation does not currently pose a risk, Qu Hongbin also stressed that future policies should be tilted towards steady growth to avoid repeating the economic slowdown in the first half of last year. In fact, a simple comparison of PMI data in January and the same period last year can also be found that the opening situation of manufacturing activities is completely different. The initial value of HSBC PMI in January last year was 51.9, which was higher than the previous period. It has maintained its upward trend for five consecutive months, which is a good start. In January of this year, the initial value of HSBC PMI has dropped from the previous period, and it has shown a downward trend for three consecutive months.

"We expect the economy to start at a low level this year. The economic growth rate will fall back to 7.5% in the first quarter." CITIC Securities pointed out in the latest report that the short-term economy will still fall slightly, mainly due to short-term investment pressure, consumption and exports. A modest rebound in the short term is not enough to offset the impact of the fall in investment.

In the report, it also pointed out that with the low economic growth rate and weakening inflationary pressure in the first half of the year, in order to maintain reasonable employment, the steady growth policy may be introduced, and the policy is expected to be adjusted.

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