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The High Cost Of Labor Costs In The First Quarter May Lead To Investment Boom.

2008/4/17 11:24:00 19

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Before the National Bureau of statistics officially released the macroeconomic data of the first quarter of the year, the macro data in some places have been released and opened a corner of the macroeconomic map in the first quarter.

The state and local statistics departments have learned that the price of fixed assets has reached the highest level in recent years because of the rising cost of labor in the first quarter, and the price of investment in some areas, such as Guangdong and Hebei, has risen to a new high of 10 years or even 13 years.

Since the price of fixed asset investment is closely related to the PPI of industrial products, the latter is likely to set a new high in March, which will undoubtedly create pressure on the further rise of future prices.

Earlier, Xie Fuzhan, the director of the National Bureau of statistics, has publicly pointed out that in the short term regulation policy, we should adjust the relationship between the prices of workers and farmers, increase the subsidy to agriculture, prevent the excessive increase in the income of workers, and lead to a spiralling rise in prices and wages, and reduce the inflationary pressure caused by labor costs.

In the face of the slight upward adjustment of PPI and CPI (consumer price index), Li Xiaochao, spokesman of the National Bureau of statistics, will give a statement on the future price policy in a press conference held in the afternoon of April 16th.

Labor cost leads to high investment

In the first quarter of this year, the economic growth rate is expected to be over 10%. Under the premise of a favorable trade surplus, investment growth and consumption growth have increased over the same period last year.

But an important reason for the slowdown in real economic growth this year is the fact that investment in real terms has declined due to the rapid growth of labor costs.

According to the figures released by the Gansu provincial government in April 14th on the analysis of the economic situation of the province, the growth of fixed assets investment in Gansu in the first quarter was 29.2% and the increase in urban investment was 35.5%.

Last year, total social investment increased by 22.6%, and urban investment increased by 35.15%.

However, according to the Gansu investigation team of the National Bureau of statistics, in the first quarter of 2008, the total index of investment in fixed assets in Gansu rose by 3.6%.

Therefore, considering the price growth factors, the investment in real cities may be lower.

Gansu investigation team found that in the first quarter of this year, the reason for the rise in investment prices in Gansu was mainly that the price of construction and installation projects rose too fast, and the biggest increase was labor costs, which rose by 9.5%.

This increase in actual investment has not seen much improvement, making Gansu's economic growth indeed decline compared with last year.

It is reported that Gansu's economic growth in the first quarter of this year was 10.1%, down 1.3 percentage points from last year.

Shen Jianfen, a Zhejiang production and investment Price Bureau of the Statistics Bureau, points out that in theory, if the investment price increases too fast, it may lead to a decline in actual investment growth.

At the same time, the enthusiasm of business investment will also be reduced.

Some agencies predict that the growth of urban investment in the first quarter of this year will be around 26%, slightly higher than last year's 23.7%.

But taking into account the increase in investment prices, the real growth rate may not rise.

Tsinghua University released the economic forecast report in late March this year. It thinks that the growth of urban investment this year is about 21%, lower than last year's growth rate of about 25%.

Hua Ruxing, a professor at Tsinghua University, pointed out that after deducting some price factors, the actual increase may be only 16% - 17%.

Prevent PPI conduction to CPI rise

However, Shen Jianfen said that the direct correlation between fixed asset investment price and CPI is not large, and there is PPI effect in the middle.

According to the figures in March, she said, PPI is on the rise, while CPI is in the downlink stage. Whether PPI will pmit in the future will cause further rise of CPI, which calls for attention.

Coincidentally, statistics from Guangdong, Qinghai and Hebei showed that investment prices of fixed assets in the first quarter were in a new high, of which Hebei rose 8.1%, a 13 year high, or 5.1 percentage points higher than the same period last year.

Among them, labor costs and material costs rose overall, rising 10.4% and 13.4% respectively.

Guangdong's investment in fixed assets rose 10.6% in the first quarter, an increase of 9.3 percentage points over the same period last year, of which labor costs rose 14.4%.

The rise in labor costs has also led some analysts to worry about the rapid rise in prices.

Wang Xiaoguang, a Macroeconomic Research Institute of the national development and Reform Commission, said that due to the scarcity of land, the supply and demand of agricultural products had a problem of cost push and demand expansion last year, and the cost of labor in the future will still rise.

In this sense, "inflation is very reasonable".

According to his research, from 2000 to 2006, the lowest income group of 10%, since the first half of 2007, because of the rapid rise in prices, its real income is declining. Therefore, to prevent prices from rising too fast, we need to increase production, curb demand, and subsidize low-income people at the same time.

Xie Fuzhan, director of the National Bureau of statistics, also believes that in order to prevent excessive price growth, in the short term, in addition to continuing to adhere to a prudent fiscal policy and tight monetary policy, and adjusting the price relationship between workers and farmers, reducing the inflationary pressure caused by labor costs, we need to vigorously develop agricultural production, increase imports of agricultural products, and strictly control the export of agricultural products.