Summary
At the turn of the third quarter and the fourth quarter, most institutions predict that the year-on-year GDP growth rate in the third quarter will fall in the range of 5.0-5.7%. Wind’s consensus forecast is 5.2%, while On the other hand, there are frequent signs of slowdown in economic recovery in the third quarter, and there are contradictions between the two. By separately measuring the GDP of each industry, we predict that the economic situation in the third quarter is not that optimistic: the national overall GDP forecast growth rate is about 4.9%, which is lower than the lowest value predicted by various institutions. We need to beware of the expected difference and pessimism caused by the data being released that is less than expected. .
The current economic production activities are still in the recovery range, but the high-speed recovery period of production has basically ended in September. It is predicted that the production recovery speed in the fourth quarter will be further weakened compared with the third quarter. At the same time, domestic policies are gradually returning to normalization. When the economy as a whole is about to return to potential output levels, it is normal for the recovery momentum to weaken.
In terms of prices, current consumer prices have fallen back to a reasonable range, and there is no need to worry about inflationary pressure in the short term. Although the rebound in PPI has been suspended, it is a short-term fluctuation and is still in an upward cycle. In the long term, the global economy will continue to recover, the domestic economy will also continue to improve, and the PPI trend will continue to be driven by basic demand.
Special topic: Economic growth in the third quarter may be lower than expected
In March and July this year, Menggs used industry high-frequency data to forecast GDP by industry. The year-on-year GDP growth rates in the second quarter were about -7% and about 3.15% respectively, which were very consistent with the actual results, confirming the prediction effect of this method. Now that high-frequency data for the third quarter are available, we continue to use this method to predict the GDP growth rate in the third quarter to explore the economic situation in the third quarter.
The following table summarizes our GDP calculation results for various industries. According to the results, the economic situation in the third quarter is not that optimistic: The national overall GDP forecast growth rate is about 4.9%, which is lower than the lowest forecast by various agencies. value, we need to beware of poor expectations and pessimism caused by data being released that falls short of expectations. From an industry level, the economy in the third quarter showed two major characteristics:
1. All industries generally continued to rebound
Among the 11 industries announced by the Bureau of Statistics, including industry, wholesale and retail The growth rates of nine industries, including finance, real estate, etc., continued to pick up, laying the foundation for the overall economic recovery. Among them, the PMI production item reached 54 in September, maintaining a high level of prosperity; the year-on-year growth rate of industrial added value also reached 5.6% in August, both showing that the industrial sector continues to improve. Therefore, we judge that the industrial growth rate increased from 4.1% in the second quarter. to about 5.6%. However, recent high-frequency data shows that starting from September, Zhejiang Electric Power Co., Ltd.’s coal consumption for power generation has declined compared with August. Therefore, it cannot be ruled out that the recovery trend of industrial production will slow down in the near future.
In the wholesale, retail and transportation industries, the total retail sales of consumer goods by enterprises above designated size has recovered to 4.4% in August. According to high-frequency data, car sales in September increased by about 23% year-on-year, showing that consumption Driven by the rebound in wholesale and retail sales, the national freight volume growth rate also reached 4.8% in August, indicating a rapid recovery. Therefore, we judge that the growth rate of the wholesale and retail industry will increase from 1.2% in the second quarter to about 5.0%, and the growth rate of the transportation, warehousing and postal industry will increase from 1.7% in the second quarter to about 5.9%.
After the epidemic gradually eased and people’s lives gradually returned to normal, the service industry generally recovered. Overall, the services PMI index rose from 52.6 in the middle of the year to 54.2 in the third quarter, accelerating the recovery. Among them, although the catering industry is still affected by the epidemic, the recovery speed in the third quarter is relatively fast in terms of the income of catering enterprises in the community and the income of catering enterprises above designated size; commercial housing sales have not completely gotten out of the negative growth range after experiencing a round of blows. , but the recovery speed is very fast, and real estate developers are also more active in acquiring land. The real estate industry index is expected to reach about 6.8% in the third quarter.
2. Construction industry growth slowed down
The construction industry and financial industry recovered strongly in the second quarter, and the real estate industry also grew faster than the average, all of which benefited from the policies. Loosening has boosted overall economic growth.
However, since the third quarter, on the one hand, the impact of floods has delayed the start of the construction industry, and on the other hand, the increase in policy funds in the second half of the year has been limited, resulting in overall construction industry activity being at a high level and flat. This can also be verified from the data. The average PMI of the construction industry in the third quarter was 60.3, slightly higher than 60.1 in the second quarter. High-frequency data on the output of construction steel such as threads shows a downward trend from high levels. Therefore, we judge that the growth rate of the construction industry in the third quarter declined slightly compared with the second quarter, reaching about 7%.
Overseas risks cannot be ignored in the fourth quarter
With the improvement of economic indicators, monetary policy has tightened from the margin in the second quarter to "implementing normal monetary policy for as long as possible" recently. Domestic fundamentals Risks on both domestic and policy fronts are relatively small. Coupled with increasingly abundant vaccines, monitoring and treatment methods, epidemic risks can also be controlled. Therefore, the main risks faced in the fourth quarter are overseas risks.
Since August, the epidemic situation in some European countries has formed a "second rise" trend. At the same time, the epidemic situation in the United States has also bottomed out and rebounded again. On the other hand, the U.S. election has also added to the world's many variables. Will the recurrence of overseas epidemics affect the progress of its economic recovery? If Biden wins the vote, will it force Trump to take some desperate measures? These uncertainties will continue to ferment in the fourth quarter, requiring us to maintain close observation and a high degree of vigilance.
Production - Decline in recovery function
The manufacturing PMI in September rose slightly from the previous value of 51.0 to 51.5, still in the expansion range. From a sub-item perspective, the production index increased from the previous month to 51.5. 53.5 recovered slightly to 54, but judging from high-frequency data, the blast furnace operating rate in September continued to fall from about 71% at the beginning of the month to 68% at the end of the month. The average daily coal consumption for power generation and steel production also showed a similar trend, and the two showed a certain degree of contradiction. In terms of subdivided industries, compared with August, industries with faster economic expansion are concentrated in automobile manufacturing, agricultural and sideline food, petroleum processing, chemical fiber and rubber and plastic product manufacturing. In addition, industries with higher prosperity include Electrical machinery and equipment manufacturing, pharmaceutical manufacturing, computer, communication, electronic equipment and instrumentation manufacturing, non-metallic mineral products, etc. These industries are generally biased toward the middle and lower reaches of the manufacturing industry. The difference in prosperity between upstream and downstream industries may explain the contradiction between high-frequency data and PMI.
Data from the National Bureau of Statistics showed that the PMI of large enterprises was 52.5, continuing to strengthen compared with August; the PMI of medium-sized enterprises was 50.7, a decrease of 0.9 from August; the PMI of small enterprises was 50.1, an increase of 2.4 points from August. percentage points, returning to the prosperous range. The Caixin PMI and BCI indexes fluctuated slightly downward in September. Although they deviate from the official PMI data in the short term, it is most likely due to the sampling area. The overall situation shows a certain degree of complexity and the characteristics of wandering in this range.
Demand - external demand is stable, domestic demand is recovering
1. Consumption - has not yet fully recovered
From the perspective of food, clothing, housing and transportation, residents’ consumption performance is not good. one. During the National Day holiday, tourism and accommodation industry data showed a recovery to 70-80% of the level of the same period last year, which shows that domestic demand has not yet fully recovered. The auto market continues to improve, and sales have further picked up. According to data released by the Passenger Car Association, in September, China's automobile production and sales were 2.524 million units and 2.565 million units respectively, a year-on-year increase of 14.1% and 12.8% respectively; the upward trend in real estate sales weakened , the average daily transaction area of ??commercial housing in 30 large and medium-sized cities continued to rise to 10.77% year-on-year in September, but the growth rate dropped by 5.2% compared with August. Movie box office revenue in September was 2.2 billion, lower than that in August. The national box office revenue during the National Day holiday was 3.95 billion yuan, the second-highest result in history. Although it was mainly due to a concentrated outbreak after long-term demand suppression, it also reflected residents' urgent consumption willingness and the inertia of consumption habits.
2. Investment - driven by real estate, overall flat
In September 30, the transaction area of ??commercial housing in large and medium-sized cities was 10.8% year-on-year. The growth rate has declined but still maintained double-digit growth. The enthusiasm of real estate developers for acquiring land is basically the same as that in August. However, affected by two holidays in early October, the area of ??land acquired dropped significantly.
The area of ??land acquired and the area of ??commercial housing sold are both synchronized indicators of new construction and real estate investment. Therefore, it can be reflected that the growth rate of real estate investment in September will decrease slightly compared with August but will still remain at a high level. This can also be confirmed by looking at the prices of rebar and cement.
The construction PMI index in September was 60.2, the same as in August, while activity expectations increased to 67.8. According to data from the China Association of Automobile Manufacturers, the commercial vehicle market production and sales in September completed 479,000 and 477,000 units respectively, a month-on-month increase of 12.7% and 10.6% respectively; a year-on-year increase of 39% and 40.3%, respectively, still maintaining a very high growth rate, so the overall It seems that the intensity of infrastructure investment in September was basically the same as last month. Looking forward, factors such as a fall in the supply of special bonds, an upward trend in risk-free interest rates, and a cooling climate may restrict the intensity of infrastructure investment. However, considering that some local governments have recently adjusted the use of special bond funds, the pace of short-term fiscal investment is expected to accelerate. It is expected that four The quarterly infrastructure investment growth rate may have a slight upward opportunity.
3. Exports - stable structure, sustained high growth
Exports in September continued to maintain a high level of about 10% year-on-year. Judging from domestic high-frequency data, export container freight rates The index continues to rise, and the China Dry Bulk Import Freight Index (CDFI) and the Baltic Dry Bulk Index (BDI) are also generally at the same level as the previous period. Among them, the contribution of anti-epidemic supplies has gradually declined, while the export of other products has made up for this gap. Excluding textiles (mainly masks) and medical instruments and equipment, the export growth rate reached 8.6%, reflecting changes in demand structure. However, the recovery status of major economies in September is different. From the perspective of prosperity indicators, the Japanese and European PMIs continue to rebound, while the U.S. PMI declined slightly. The second outbreak of overseas epidemics will also have a certain impact on overseas demand, thus affecting exit.
Policy - Return to Normalization
In September, M2 increased by 10.9% year-on-year, with new RMB loans of 1.9 trillion and social financing of 3.48 trillion, both higher than market expectations. level. New credit is mainly concentrated in medium and long-term corporate loans and medium- and long-term loans to residents, indicating that investment demand and housing mortgage demand are currently significantly stronger. Recently, Central Bank Governor Yi Gang said that he would "implement normal monetary policy for as long as possible." This statement has its economic basis. First, the economy has gradually returned to near the potential output level, and there is no need for too loose monetary conditions; second, Prices have also been within a reasonable range recently. In addition, although the RMB exchange rate has continued to rise recently, export growth has also remained at a high level. There is no strong incentive to stabilize the exchange rate to promote exports. Therefore, as the economy continues to improve in the fourth quarter, monetary policy will gradually return to normalization.
Price - the price environment is stable
1.CPI - Return to the 1st era
The CPI in September was 1.7% year-on-year, continuing to fall, and the core CPI recorded a year-on-year record of 1.7%. gained 0.5%, the same as last month. Among them, the growth rate of food prices continued to fall. High-frequency data showed that the average retail price of pork in 36 cities rose to more than 31.34 yuan/jin, and the vegetable price index was basically the same as last month. Egg prices rebounded slightly, rising 1.91% month-on-month. Prices of services, such as movie tickets, educational services, clothing, etc., increased slightly, reflecting the further recovery of the consumption and service industries.
2. PPI - short-term fluctuations will not change the upward trend
In September, PPI for all industrial products recorded -2.1%, a slight decrease, mainly due to the decline of 0.6% from 0.6% in August. As of September, -0.1%, while production data recorded -2.8%, continuing to improve month-on-month. Mainly due to the impact of changes in international oil prices, prices in oil-related industries have turned from rising to falling. Judging from high-frequency data, the Nanhua Industrial Product Price Index turned from rising to falling in September, mainly due to the decline in industrial raw materials such as petroleum and steel, while the prices of coal, cement and other non-metallic, chemical raw materials and other products showed positive growth.