PPI turns positive for the first time every six months in January

On February 10, the National Bureau of statistics released the national PPI (factory price index of industrial producers) data in January this year. In January, PPI rose 0.1% year on year, and fell 0.5% year on year last month. The month on month ratio was flat, which has been the same for two consecutive months. From the year-on-year data, the year-on-year growth rate of PPI dropped to 0 in June 2019, and remained negative from July to the end of the year. January 2020 is the first positive change in seven months. It is estimated that the year-on-year increase of 0.1% in January is the tail raising effect of last year's price change. In terms of various components, the price of means of production decreased by 0.4% year-on-year, 0.8% lower than that of last month, which affected the total PPI level by about 0.27%; the price of means of living increased by 1.3% year-on-year, the same increase as that of last month, which affected the total PPI level by about 0.35%. Pan Xiangdong, chief economist of new era securities, said that the price rise of crude oil and other commodities, combined with a low base, boosted the positive PPI.

The price growth of oil and other industries rebounded more than that of the previous month, and the oil and gas exploitation industry rose 4.3% on a month on month basis, 0.5 percentage points higher than that of the previous month. Among the major industries, oil and natural gas exploitation increased by 17.5%, 11.7% higher than last month; non ferrous metal smelting and calendering industry increased by 2.4%, 1.3%. Oil, coal and other fuel processing industries, ferrous metal smelting and rolling processing industries have changed from falling to rising. In addition, the year-on-year decline in coal mining and washing industry, chemical raw materials and chemical products manufacturing industry. Wang Qing, chief Macro Analyst of Dongfang Jincheng, said that the momentum of low base and new price increase of industrial products in the middle and upper reaches was generally enhanced, driving the year-on-year increase of PPI in January to become positive for the first time after half a year. In the downstream industries, except for food and other industries driven by the strong demand for Spring Festival, the price increase effect is not obvious. In addition, despite the rapid spread of the new crown pneumonia outbreak in January 20th, the impact of the epidemic on the January PPI data is not obvious due to the roughly coinciding with the Spring Festival holiday. The impact of the epidemic is negative.

If short-term control is possible, PPI may rebound. How will the new crown pneumonia epidemic affect the future trend of PPI? Wang Qing believes that the new crown pneumonia epidemic has a negative impact on PPI, and the growth rate of PPI will be negative again in February. From the supply side, the epidemic will delay the resumption of work and make production difficult; from the demand side, the epidemic will have a significant negative impact on consumption and investment and curb the total demand. With the gradual recovery of traffic and the resumption of enterprises, the supply side impact will gradually decrease, but the negative impact of the epidemic on demand will continue. Therefore, from the perspective of supply-demand comparison, the epidemic has a certain pull down effect on PPI - in fact, in late January, due to the epidemic, the demand outlook weakened, and the international commodity price has experienced a round of decline. Pan Xiangdong said that the short-term impact of the epidemic on the growth of PPI is greater and will interfere with the previous trend of PPI rise. The SARS epidemic in 2003 had little impact on the growth of PPI at that time, but now there are some changes in the situation. The proportion of China's economy in the world has increased to 15.8% in 2018, and the demand for commodities has increased significantly. After the subprime crisis, the potential economic growth has declined, and the economic growth has continued to step down. In addition, the response measures of this round of epidemic are very strict, and some places have been closed down and delayed to return to work. However, if the main impact of the epidemic can be controlled in the first quarter, after the recovery of economic activity, the PPI growth rate may rebound in a trend rather than a short-term retaliatory rebound.