PMI Of Manufacturing Industry Expanded For 10 Consecutive Months, And The Economy Recovered To A Good Momentum

According to the data released by the service industry survey center of the National Bureau of statistics and the China Federation of logistics and purchasing, the purchasing manager index (PMI) of China's manufacturing industry was 51.9% in December 2020, which was above the critical point for 10 consecutive months.

"The good momentum of China's economic recovery continues to consolidate." Zhao Qinghe, a senior statistician at the service industry survey center of the National Bureau of statistics, said that the manufacturing industry generally maintained a good momentum of steady recovery and its prosperity was at a high level in the year.

From the perspective of sub index, the production index and new order index are higher than the critical point in the five sub indexes of manufacturing PMI. Zhao Qinghe said that both sides of production and demand continued to improve. The production index and new order index were 54.2% and 53.6% respectively, which were 0.5% and 0.3% lower than the previous month, but both were the second highest points in the year, and the difference between the two continued to narrow. The manufacturing industry maintained a good growth trend and the relationship between production and demand was more balanced.

The import and export index continued to expand for four consecutive months. The new export order index and import index were 51.3% and 50.4% respectively, which continued to be in the boom zone. "The survey results also show that the expected index of production and operation activities of export enterprises has rebounded for eight consecutive months, reaching the highest level of the whole year, and the manufacturing export enterprises' confidence in market development has been continuously strengthened." Zhao Qinghe said.

In addition, the leading role of high-tech manufacturing industry continues to show. Since 2020, PMI of high-tech manufacturing industry has always been higher than that of manufacturing industry as a whole, reaching 55.8% in December 2020, which is still the second highest point in the year, although it is down 0.4% compared with the previous month. Among them, the production index, new order index and employee index were 59.3%, 58.2% and 52.6%, respectively, which were 5.1%, 4.6% and 3.0% higher than that of the manufacturing industry as a whole, indicating that the high-tech manufacturing industry has a prosperous production and demand, and the labor demand has continued to grow, which has significantly driven the overall recovery of the manufacturing industry.

However, Zhao Qinghe also pointed out that in recent years, the prices of some bulk commodities continued to rise, coupled with the continued warming of market demand, which accelerated the rise of purchasing prices of raw materials and selling prices of products in the manufacturing industry. In December 2020, the purchase price index and ex factory price index of main raw materials were 68.0% and 58.9%, respectively, 5.4% and 2.4 percentage points higher than the previous month, both of which were the annual highs. The rapid rise in raw material prices has increased the pressure on enterprises' costs. 49.4% of the enterprises reflect the high cost of raw materials, which is a high point in recent two years.

In addition, there is still differentiation among enterprises. In December 2020, the PMI of both large and medium-sized enterprises was 52.7%, which continued to operate in the prosperous range of 52.0% and above; the PMI of small enterprises was 48.8%, lower than 1.3% of the previous month, and fell below the prosperity and drought line. In this regard, Zhao Qinghe said that the proportion of small enterprises reflecting high raw material cost, logistics cost and labor cost increased by 5.0%, 4.6% and 1.5% respectively compared with the previous month. The operating cost of small enterprises has increased, and the profit space has been squeezed to a certain extent.

Wen bin, chief researcher of China Minsheng Bank, believes that the recovery of small enterprises is weak and there are still some difficulties in the recovery process. In the next stage, macro policies should maintain continuity, stability and sustainability, and grasp the timeliness and effectiveness of policies; we should increase support for manufacturing industry, small and micro enterprises and other weak links, do a good job in policy continuity, improve the accuracy and effectiveness of policies, and further consolidate the foundation of recovery.