PMI Of China'S Manufacturing Industry Drops To 50.9, And Enterprises Expect A Substantial Improvement

Caixin China's manufacturing PMI (purchasing manager index) in February 2021 released on March 1 recorded 50.9. Although it was in the expansion range for the tenth consecutive month, it has dropped for three consecutive months to the lowest value since June 2020, indicating that the marginal effect of manufacturing recovery has further weakened.

This trend is consistent with the PMI of the manufacturing industry of the National Bureau of statistics. The PMI of the manufacturing industry in February 2021 released by the National Bureau of statistics was 50.6, lower than 0.7 percentage point of the previous month, and also slowed down for three consecutive months.

The supply and demand of manufacturing industry continued to expand, but the expansion speed slowed down. February's production index and new orders index recorded the lowest values in the past ten months and nine months, respectively. Foreign demand continued to drag down aggregate demand, and the index of new export orders was significantly lower than the boom and bust line for the second consecutive month. In the survey, the enterprises interviewed emphasized the negative impact of the epidemic situation at home and abroad on the scene bearing of the city in winter.

Affected by the slowdown in the growth rate of supply and demand, the employment market continued to be under pressure, and the employment index in February was in the contraction range for the third consecutive month, and the decline rate was expanded. After the slow down of market recovery rhythm, enterprises are not eager to fill the vacancies after employees leave. Nevertheless, the number of backlog fell for the first time in nine months, indicating weak market demand.

The price index continues to be high and inflation pressure continues to increase. In February, the purchasing price index of manufacturing enterprises was significantly higher than the boom and bust line, but the increase slowed down slightly. The enterprises interviewed said that the prices of raw materials, especially industrial metals, continued to rise rapidly, and transportation prices also increased. The rise in cost side prices was also partly transmitted to the demand side. In February, the ex factory prices of manufacturing enterprises continued to rise, but the increase slowed down.

Despite the slowdown in the expansion of supply and demand, the managers of manufacturing enterprises are confident that the epidemic situation at home and abroad will improve, and the production and operation expectation index in February jumped to the second highest since September 2014.

Wang Zhe, a senior economist at Caixin think tank, said that in February, the recovery momentum of the manufacturing industry further weakened, the growth rate of supply and demand slowed down, employment pressure increased, and inflation pressure continued to increase. Nevertheless, enterprises were more optimistic about the future. Market confidence mainly came from the accumulation of experience in epidemic prevention and control over the past year, especially the factors that the adverse autumn and winter seasons are coming to an end. At present, it seems that the main challenge for the policy is to take good care of the economic recovery in the post epidemic era and pay enough attention to inflation.