Manufacturing Industry In January

- Feb 18, 2021-

According to relevant data, in January 2021, the PMI of manufacturing industry fell by 0.6% to 51.3% on a month on month basis, slightly lower than the market expectation (51.6%), still in the expansion range. According to the calculation, the year-on-year decline of PMI in manufacturing industry continues to narrow, from - 2.0% in December last year to - 0.9% in January this year, and it is expected to achieve year-on-year growth in February. The repeated epidemic led to the cold of some non manufacturing business activities. In January, the PMI of non manufacturing industry decreased by 3.3 percentage points to 52.4% on a month on month basis. Although it is still in the expansion range, it is obviously lower than the market expectation (55.0%). The cold of non manufacturing industry led to the decline of comprehensive PMI from 55.1% in December last year to 52.8% in January this year.


The rebound of overseas epidemic will slow down the growth of foreign demand, and the recovery of manufacturing industry will be driven by the dual engines of export and consumption. In January, the index of new orders in the manufacturing industry fell 1.3 percentage points to 52.3%. Among them, the new export order index fell slightly, down 1.1 percentage points to 50.2% on a month on month basis, slightly higher than the boom and bust line, reflecting the slowdown of overseas demand growth affected by the epidemic. In the macroeconomic outlook of 2021, it is found that the recovery of China's manufacturing industry in 2020 is mainly driven by the export engine, and China's exports make up for the demand gap of overseas markets. This process will be accompanied by global economic recovery. It is expected that in the future, the recovery of manufacturing industry will be driven by double engines instead of exports. Domestic and foreign demand will jointly drive the recovery of manufacturing industry.


The overall production of the manufacturing industry is improving, and the trend of actively increasing inventory is increasing sharply. The impact of the epidemic on the production of manufacturing industry has gradually become smaller. In January, the production index fell by 0.7 percentage point to 53.5%, which is in the expansion range. In addition, the finished goods inventory index rebounded significantly, from 46.2% in December last year to 49.0% in January this year, in line with our previous expectations. According to our report, the turnover days of finished goods inventory return to normal, and the superimposed PMI is in the expansion range, indicating that sales are further warming up. On this basis, the recovery of finished goods inventory shows that the production expectation of enterprises is better, and the increase of inventory belongs to the active behavior of enterprises rather than the passive increase of inventory caused by weak demand. In January, the raw material inventory index also rebounded, with a month on month increase of 0.4 percentage point to 49.0%. In the case of strong demand and warmer sales, the increase of raw material inventory also shows that the production expectation of the enterprise is good. On the basis of production expansion, the inventory of finished products will be further improved.


Manufacturing price index fell slightly, commodity price recovery will promote PPI repair. Affected by the slowdown of commodity price growth, the purchase price and ex factory price fell by 0.9 and 1.7 percentage points to 67.1% and 57.2% respectively in January, but they are still at a high level. Under the background of commodity price recovery, manufacturing enterprises will continue to experience the process of price recovery.


The local epidemic rebounded and the labor landscape showed a trend of differentiation. Affected by the rebound of local epidemic situation and the tightening of prevention and control measures, the employment situation of manufacturing and service industries decreased significantly in January, with the manufacturing industry employee index dropping 1.2 percentage points to 48.4% and the service industry employee index dropping 1.1 percentage points to 46.9% month on month. On the contrary, due to the low mobility of construction workers, less affected by the epidemic situation and prevention and control measures, the employment situation of the construction industry rebounded slightly, from 52.7% in December last year to 52.8% in January this year.