Source: Citic Securities Research
By Yang Fan, Maxi Gaowa, Peng Yang
In April, the overall economic operation was sound, and the performance of industrial production was outstanding, but the problem of weak domestic demand remained. Manufacturing value added and manufacturing investment continue to take the lead, while the service sector production index, consumption and investment have weakened to varying degrees. We understand that the wrong month of holidays and the gap in policy rhythm are the reasons for the slowdown of the above indicators. The growth rate of industrial added value on the production side exceeded market expectations, and after deducting the wrong month factor of holidays, the service industry as a whole maintained a recovery trend. The growth rate of the three major areas of fixed asset investment on the demand side has slowed down to varying degrees, and infrastructure investment has slowed down a lot, mainly due to the weakening support for the issuance of additional treasury bonds and the slow progress of issuing special bonds. The consumption growth rate declined under the holiday dislocation effect, but the month-on-month growth rate continued to be lower than the historical period, which revealed that the current commodity consumption is still weak. Looking back, the reserves of government debt instruments are relatively abundant, special treasury bonds have been issued, and the brewing launch of real estate policies will help to alleviate the problem of insufficient domestic demand. In view of the rising bond supply pressure and the strength of real estate policies, it is recommended to be cautious about long-end interest rates.
▍ economy: industrial production performed brightly in April, but the problem of weak domestic demand remained. The wrong month of holidays and the pace of policy were the reasons for the slowdown of some indicators. The use of government bonds and the increase of real estate relief policies contributed to the subsequent repair of domestic demand.
In the economic data in April, industrial production performed better, but the service industry, consumption, investment and other areas weakened to varying degrees, and the wrong month and holiday may be one of the reasons. Excluding special factors, the overall economic operation is stable, and the performance of the manufacturing industry continues to be bright. From a structural point of view, supply expansion and industrial upgrading are still the main features of the current economy, with positive improvement in demand-side exports, but domestic demand is still weak. Price and financial data also suggest that the temperature of economic operation needs to be improved. In addition to the wrong moon during the holidays, the policy pace gap may also be the reason for the weakening of data in some areas in April. With the subsequent issuance and use of special bonds and special treasury bonds, the real estate policy is brewing and the problem of insufficient domestic demand is expected to be alleviated.
▍ production: the growth rate of industrial value added rebounded faster than expected in April, and the repair of the service industry slowed down in April due to the wrong month during the holiday.
In April 2024, the added value of industries above scale increased by 6% in real terms compared with the same period last year.Crashbandicootrollingstones.7%, 2.2 percentage points higher than the growth rate in March this year and 1.2 percentage points higher than the Wind consensus forecast of 5.5%. Structurally, the main drag on the growth of industrial value added in April was the real estate-related non-metallic mineral products industry, ferrous metal smelting and Calendering industry, as well as some mining industry. industries with a good production boom include some high-end equipment manufacturing industries and mid-stream chemical and non-ferrous industries. The higher-than-expected growth rate of industrial value added in April is closely related to the better export performance in April this year, as well as the higher number of working days in April this year than in April last year. In the service sector, in April 2024, the service industry production index increased by 3.5% compared with the same period last year, down 1.5 percentage points from the previous value, mainly due to the high base caused by the wrong month during holidays. After deducting the wrong month on holidays, the service industry as a whole remainedCrashbandicootrollingstonesTo recover. In terms of structure, the growth rate of modern service industry is faster. In April, the production index of information transmission, software and information technology services, leasing and business services, finance, transportation, warehousing and postal services was 7.3, 2.6, 1.9 and 0.8 percentage points higher than that of the overall service sector, respectively.
▍ investment: the growth rate of fixed asset investment has slowed down, mainly due to the decline in the growth rate of infrastructure investment due to the weakening of the marginal strength of the policy. the impact of the real estate rescue package on real estate sales and investment is worth paying attention to.
We estimate that the total investment, infrastructure investment, manufacturing investment and real estate development investment in April were 3.6%, 5.9%, 9.3% and-10.5% respectively compared with the previous month, which were-1.1%,-2.7%,-1.0% and-0.4% respectively compared with the previous month. On the one hand, the decline in the growth rate of infrastructure investment is related to the weakening of the support for the issuance of additional treasury bonds and the slowdown of the issuance of special bonds, on the other hand, it also reflects the marginal weakening of the willingness of policy counter-cyclical adjustment. The growth rate of manufacturing investment remains at a high level, and the marginal slowdown is related to the decline in profit growth of industrial enterprises. It is suggested to pay attention to the changes of PPI and capacity utilization to track the persistence of manufacturing investment at high levels. Property sales and investment continued to be sluggish, and house prices fell more sharply, focusing on the marginal impact of the May 17 rescue package on property sales and investment.
▍ consumption: social zero is lower than expected mainly due to the dislocation effect of the May Day holiday. More attention should be paid to the fact that the month-on-month growth rate continues to be lower than the historical period, which reveals that the current commodity consumption is still weak.
In April 2024, the growth rate of retail sales of consumer goods fell back to 2.3% year-on-year, much lower than the 4.6% expected by the Wind. The core driver is the faster-than-expected decline in service consumption caused by the dislocation of the May Day holiday. A spokesman for the National Bureau of Statistics said that this factor may drag on social zero by more than 1 percentage point. The distribution characteristics of the May Day holiday in 2019 are the same as this year. Food and beverage consumption dropped 3.3% month-on-month in April 2019, but only 1.2% this year. The data is still resilient and there is no need to worry too much. We believe that what deserves more attention is the performance of persistently weak consumption of goods. From January to April this year, the quarter-on-quarter growth rate of social zero recorded 0.08%, 0.04%, 0.15% and 0.03% respectively, and the situation of hovering at low levels was relatively clear, obviously weaker than that of the same period in previous years. Considering that the vast majority of social zero is the consumption of goods (including only the consumption of catering services), this phenomenon may indicate that residents' enthusiasm for commodity consumption has always been weak, which echoes the results shown in the latest urban depositor survey conducted by the central bank 24Q1. On the contrary, residents' enthusiasm for tourism, social culture and entertainment and other service areas has always been relatively high. In terms of the industry, the growth of sports and entertainment goods, communications equipment, home appliances, alcohol and tobacco, and compulsory consumer goods is relatively bright, while the consumption of building materials related to automobiles and real estate chains is weak. The overall employment situation is good, and the unemployment rate surveyed in cities and towns has dropped to the level before the epidemic.
▍ bond market: bond supply pressure superimposed real estate policy, long-end interest rates remain cautious.
The growth rate of some economic data slowed in April, which is marginally good for the bond market from the perspective of economic data. However, for the bond market, at this stage, the focus is on the supply pressure of special treasury bonds and the landing effect and follow-up impact of a series of broad real estate policies, combined with the interest rate risk of long-term bonds mentioned many times by the central bank recently. be cautious about long-term interest rates in the short term.
▍ risk factors:
The recovery of domestic demand fell short of expectations, domestic policies fell short of expectations, overseas recessions and risk events exceeded expectations, and overseas monetary policies exceeded expectations.
