Steel PMI returns to expansion range after two years

On May 1, the service industry survey center of the National Bureau of statistics and the China Federation of logistics and purchasing released data showing that the purchasing manager index (PMI) of China's manufacturing industry in April was 50.1%, slightly down 0.1% from the previous month, and was in the expansion range for two consecutive months.

It is worth noting that on the same day, the steel PMI index of April released by the China Federation of iron and steel logistics professional committee was 57.3%, up 7.6% from the previous month, and returned to the top of the prosperity and withering line after two years.

Pan Jiancheng, deputy director of the China Economic Prosperity Monitoring Center of the National Bureau of statistics, told the daily economic news that the PMI data of the manufacturing industry in April was still in the expansion range of more than 50%, indicating that China's economy is still operating in a stable and normal range. At present, the power to promote economic growth is strengthening, the effects of relevant macro policies are gradually released, and the impact of enterprises' cost reduction continues to expand. In the next few months, PMI will still operate within the normal range, and the probability of operating in the range of more than 50% is greater.

The main index confirms that supply and demand remain expanding

From the 12 sub indexes, compared with the previous month, only the purchasing price index of raw materials increased, while the other 11 indexes decreased.

Chen Zhongtao, an analyst with China Logistics Information Center, said that the PMI index of the manufacturing industry fell slightly in April, which was a normal fluctuation of the data trend. The main indexes such as production and new orders stood at more than 50%, indicating that supply and demand kept expanding, most industries kept rising, and enterprises' expectations were good. Generally speaking, the fundamentals of stabilizing and improving the current economic operation did not change.

According to the data, the production index in April was 52.2%, down 0.1% from the previous month, but higher than the average of 0.9% in the first quarter. Zhao Qinghe, a statistician at the service industry survey center of the National Bureau of statistics, believes that the manufacturing industry has maintained a steady growth. Affected by the rebound of investment, the recovery of real estate and the acceleration of infrastructure construction, the production of manufacturing industry expanded continuously.

At the same time, market demand continued to rise moderately. The index of new orders was 51.0%, down 0.4 percentage points from the previous month, but it was still above the critical point for two consecutive months and was the second highest since last year.

In the sub index, the price index of raw materials picked up was 57.6%, 2.3 percentage points higher than that of the previous month, which has been rising for five consecutive months, reaching a new high in recent two years. Among them, the prices of means of production in iron and steel, nonferrous metals, chemical industry and other industries have increased greatly recently.

Ren Zeping, a macro analyst at Guotai Junan (18.280, - 0.03, - 0.16%), believes that while the purchase price of raw materials has reached a two-year high, the input price of non manufacturing industry has also increased by 0.7 percentage points, which is consistent with the recent surge in industrial prices. The rebound in commodity prices is mainly due to the weakening of the US dollar, improved demand, low inventory and supply contraction, improving corporate profits. It is estimated that PPI in April will be - 3.9%, up 0.4 percentage points from the previous month. "Considering the decline of vegetable prices, the rise of pig prices and commodity prices, it is estimated that CPI in April will be 2.4%, up 0.1 percentage point from the previous month, and monetary policy will enter the observation period."

The basic raw material industry is showing signs of improvement

From the industry point of view, most industries are showing a rising trend. Data shows that from 21 industry categories, 13 industries have PMI index higher than 50%. Among them, the equipment manufacturing industry, high-tech industry and consumer goods industry remained above 50%, higher than the overall average level of the manufacturing industry. It shows that the upgrading of industrial structure, innovation driven and consumption driven are the main forces for the economy to stabilize and improve. The downturn of traditional basic raw material industry has changed, and the PMI index of steel, nonferrous metals and other industries has rebounded to more than 50%.

It is worth noting that PMI of iron and steel is back to 50% above the line of prosperity and withering after two years. According to the index report released on May 1 by the China Federation of iron and steel logistics professional committee, the PMI index of the domestic steel industry in April was 57.3%, up 7.6 percentage points from the previous month, rising for five consecutive months, reaching the peak since March 2013.

According to the analysis of the report, the fundamentals of domestic steel market terminal demand are still improving. However, the steel price has risen so much in a short period of time, and the risks are gradually increasing. The steel output is accelerating to release, and the steel price will face the pressure of falling down after the high steel price.

In addition, Zhao Qinghe said that while the production of the manufacturing industry maintained a steady growth, it should be noted that the downward pressure on China's economy is still large due to many factors of environmental uncertainty and market instability. In the first quarter, with the overall investment improving, the manufacturing investment still fell, which will affect the further recovery of manufacturing production. This month, the new export order index and import index of the manufacturing industry both fell down, and the import index fell back to the contraction range again, indicating that the import and export of the manufacturing industry is still facing great difficulties. The employment index dropped slightly by 0.3 percentage points below the critical point, indicating that the employment pressure has increased.

Liu Tao, a researcher at bocom Financial Research Center, believes that the recent series of macroeconomic data show that economic fundamentals are still in the period of improvement, but downward pressure on the manufacturing industry still exists. In view of the gradual improvement of foreign demand in Europe and the United States, PMI of manufacturing industry is expected to "rise slightly in a stable way" around the boom and bust line in the first half of the year, but it is not ruled out that there are fluctuations and iterations in individual months.

Pan Jiancheng said that at present, China's economy is in the process of bottoming out and stabilizing, but the foundation of economic growth is not very solid. The fundamental thing is to promote structural reform on the supply side, especially to resolutely promote the elimination of production capacity, inventory, deleveraging, cost reduction, and making up for weaknesses, and organically combine the improvement of short boards with stable growth. In addition, we should unswervingly deal with zombie enterprises, bring new vitality to the whole market through appropriate "abandoned children" and promote the development of zombie enterprises