The economy continues to maintain its momentum of recovery. Currently, there is a need to withstand the pressure of insufficient domestic demand and, more importantly, to accelerate the implementation of policies and pay attention to their actual effects.
Macroeconomic data shows that in August 2024, the CPI increased compared to the previous month, standing at 0.6% year-on-year; the PPI also increased, at -1.8% year-on-year; the manufacturing PMI fell from 49.4% to 49.1%; the total fixed asset investment fell by 0.2% year-on-year, with a value of 3.4%; new yuan loans increased by 90 billion yuan, an increase of 64 billion yuan from the previous month; M2 remained at 6.3%.
CPI: Year-on-year increase expands
Published CPI value (year-on-year): 0.6%
Previous value: 0.5%
Predicted CPI value (year-on-year): 0.7%
Commentary from Chen Long, Chief Economist at Chuan Cai Securities: The CPI in August rose by 0.6% year-on-year, with the increase expanding by 0.1 percentage points from the previous value, mainly due to the food price increase turning from flat to positive year-on-year. In terms of food, the food prices turned from being flat in the previous period to a 2.8% increase year-on-year, influenced by a significant expansion in the price increase of fresh vegetables and a change from a decrease to an increase in fresh fruit prices. According to the seasonal patterns over the years, August usually marks the end of summer and a cooling of temperatures, but this August saw temperatures rise instead of fall, with high temperatures and heavy rainfall affecting the supply of fresh vegetables and fruits, driving up their prices. On a month-on-month basis, the CPI increase in August fell by 0.1 percentage points from the previous value, mainly due to non-food prices turning from an increase to a decrease: fluctuations in international oil prices led to a 3.0% decrease in domestic gasoline prices; the end of the summer vacation and a decrease in travel demand led to a 5.1% and 0.7% decrease in airfare and tourism prices, respectively.
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PPI: Affected by insufficient demand and the downward trend of commodities
Published PPI value (year-on-year): -1.8%
Previous value: -0.8%PPI Forecast Value (Year-on-Year): -1.5%
Shanxi Securities macro analyst Guo Rui commented: The PPI is mainly affected by insufficient market demand and the downward trend of some international commodity prices. In August, the环比 (month-on-month) living materials remained unchanged, which was slightly weaker than the seasonal norm (the average month-on-month increase from 2016 to 2023 was 0.1%), mainly due to low inventory levels in some downstream consumer goods industries and resilient demand. The环比 (month-on-month) increase in production materials was -1.0%, still significantly weaker than the seasonal norm. Among them, the环比 (month-on-month) price decreases for oil extraction and processing were both significant, related to the global economic slowdown and expectations of increased production by OPEC+; influenced by the sluggish domestic real estate investment and slowing infrastructure investment, the环比 (month-on-month) decreases for non-ferrous and ferrous metal smelting and rolling processing industries were both significant; the环比 (month-on-month) price decrease in the coal mining and washing industry was 1.2%, the first significant drop below the seasonal norm since May; some technology-intensive industries saw price increases, with aircraft manufacturing prices up by 2.1%, industrial robot manufacturing prices up by 0.8%, and computer system manufacturing prices up by 0.4%.
PMI: Adjustments on Both the Supply and Demand Sides
PMI announced value (Year-on-Year): 49.1%
Previous value: 49.4%
PMI forecast value (Year-on-Year): 49.7%
Guotai Junan Securities Chief Economist Guo Lei commented: There have been adjustments of varying degrees on both the demand and supply sides, with the PMI new order index and production index each falling by 0.4 and 0.3 points respectively in August. It is worth noting that export orders remain relatively stable, increasing by 0.2 points month-on-month, indicating that the main constraint is still domestic demand. The new order index for August was 48.9, lower than the previous value of 49.3. The new export order was 48.7, higher than the previous value of 48.5. The production index for August was 49.8, lower than the previous value of 50.1.
Looking at the two indicators of PMI raw material purchase prices and raw material inventory, there was a resonance of price decline and raw material destocking in August. First, since July, the "recession trade" has heated up overseas, with significant adjustments in globally priced commodity prices, leading to a wait-and-see attitude for domestic raw material restocking. Raw material inventory is different from finished product inventory, generally having a shorter cycle and being significantly affected by short-term price trends; second, high-frequency data shows that real estate weakened month-on-month in August, with expectations of demand transmission to upstream and downstream industries, and the adjustment range of rebar prices was relatively large in the first half of August. Although the decline in industrial product prices in August was significant; judging from the intra-month trend, there were initial signs of bottoming out for industrial product prices in late August.
Fixed Investment: The Situation of Fund Arrival Affects the Progress of Projects
Fixed investment announced value (Year-on-Year): 3.4%Previous Value: 3.6%
Fixed Investment Forecast (Year-on-Year): 3.3%
Commentary by Gu Kai Securities' Macroeconomic Analyst Du Zhengzheng: This year, the growth rate of fixed asset investment has been underwhelming. On one hand, it is affected by the slowdown in investment momentum, especially the real estate investment which has not yet substantially stabilized. On the other hand, it is dragged down by the price index trend being weaker than expected. Additionally, the不理想 situation of funds in place has also impacted the progress of construction projects. According to the research data from Century Construction, the overall trend of fund availability rate at its sample construction sites from June to August was a decline, with average rates of 62.86%, 62.13%, and 62.07% respectively. In the future, as the issuance and utilization of ultra-long-term national bonds and government special bonds accelerate, the role of the "two new" policies is further strengthened, and the "two heavy" construction is accelerated and promoted, the guarantee of funds and project support is expected to gradually improve, which is conducive to maintaining a stable growth in investment.
Credit: Generally Stable
New Credit Announcement Value (Year-on-Year): 900 billion yuan
Previous Value: 260 billion yuan
New Credit Forecast Value (Year-on-Year): 932.86 billion yuan
Commentary by Chief Economist and Dean of Research Institute at Minsheng Bank, Wen Bin: In August, the increase in RMB loans was 900 billion yuan, 460 billion yuan less than the same period last year, and 640 billion yuan more than the previous month. At the end of August, the outstanding balance of RMB loans was 252.02 trillion yuan, a year-on-year increase of 8.5%.
The seasonal环比 improvement in credit allocation in August continued to show less year-on-year increase, but overall maintained a stable growth under the high base of the same period last year and changes in the financial supply side. On one hand, the acceleration of government bond issuance in August may have improved infrastructure investment, and policies such as scientific and technological innovation and equipment renovation and transformation have also supported manufacturing investment, forming a certain pull on credit demand. However, the internal driving forces represented by real estate and consumption still need to be repaired and stimulated, and the insufficient effective financing demand remains the main contradiction restricting credit expansion.
On the other hand, the interest rate cut combination in July has been implemented, guiding financial institutions to deeply explore effective credit demand, accelerate the transformation of reserve projects, and maintaining a reasonable credit growth is still necessary. However, preventing capital from idle circulation, improving operational efficiency, and the transformation of credit demand under the economic structure transition are also important directions. Against this backdrop, credit is expected to remain relatively stable in the short term, but it is difficult to have a significant rebound.M2: Focusing on Effective Financial Support for the Real Economy
M2 announced value (year-on-year): 6.3%
Previous value: 6.3%
M2 forecast value (year-on-year): 6.2%
Commentary by Zhang Jun, Chief Economist at Galaxy Securities: After M2 growth turned upward in July, it remained flat this month. M2 is an important benchmark for current investments, and it is worth paying attention to whether it can form a trend of upward movement. The "squeezed water" M2, because it is "more real," will become "more effective," and the growth rate of M2 can better reflect the strength of financial support for the real economy. Against the backdrop of a decline in credit growth, if M2 continues to rise, it may imply that the expansion of fiscal net expenditure is offsetting the downward pressure of private sector credit.
It is worth noting that M0 has rebounded for five consecutive months, but M1 has been running at a negative value for five consecutive months and continues to decline. Three pressures contribute to the decline in M1: weak corporate expectations lead to a low degree of capital activation, weak consumer investment willingness leads to poor capital flow back to enterprises, and the decline in deposit interest rates leads to the flow of deposits into wealth management.