PMI April rally policy tightening expected to continue

Yesterday, China's Logistics and Purchasing Association issued a November Chinese manufacturing Purchasing Managers Index (PMI) of 55.2%, up 0.5% from the October Index, the 4th consecutive month since the index fell in August. The PMI index rebounded continuously in April, reflecting, to a certain extent, China's economy is still in a relatively rapid development trend.　　However, the analysis points out that the PMI index is rising, probably by the price index, the real economy or not as optimistic as the data show, so the policy tightening is still expected to further enhance the possibility. The most significant increase in the purchase price index was the basic trend of a steady rise in the index. Compared to last month, only the volume index, import index, employee index and supplier distribution Time index declined, while the remaining indices increased in varying degrees, with the index of production index, finished goods stock index, and the purchase price indices rising by more than 1%, especially the biggest increase in the price index of purchase, reaching 3.6%.　　Of the 4 declines, the import index dropped 2.2%, while the remaining 3 fell by less than 1% per cent. Data from the Logistics and Procurement Federation also showed that the PMI index continued to climb 73.5% in November, up 3.6% from last month. In the sector, 20 industries are all above 50%, of which 15 are above 70%, with the highest in chemical fiber manufacturing and rubber plastic products, wood processing and furniture manufacturing, petroleum processing and coking, chemical and chemical products manufacturing, non-ferrous metal smelting and calendering processing, exceeding 80%.　　The types of products, raw materials and energy, intermediates, consumer goods and production of manufactured products are generally higher, of which only the consumer goods enterprises are slightly below 70%, the remaining three types of products enterprises have reached more than 70%.　　Will push the CPI sharply higher, despite a 4-month rebound in the PMI index, to a certain extent, China's manufacturing industry is in a sustained upward trend, but there are still many institutional scholars worried that the current PMI index continues to rise, the biggest driver is the price index, so the future government will continue to adopt the possibility of tightening policy. Ma, an economist at Deutsche Bank, argues that the main problem in the current Chinese economy is still inflation, "as can be seen from the purchase price index, which is also a big increase in PPI, which will continue to be transmitted to CPI in the near future." At the same time, Gao Weidong, a macro analyst at the Securities Trust, agrees that the purchase price of PMI is a big part of the increase. Influenced by this, many scholars believe that although the PMI data beyond the expectations of the comfort, but in raw material prices driven by the rapid rise in price index, but to highlight the domestic inflation situation is more serious, "the future government will continue to use the increase in reserve requirements and interest rate-oriented tightening policy." "HSBC's China chief economist, Qu Hongbin, said that the November PMI strong growth, especially the sharp rise in input prices, in the US quantitative easing policy back, it translates into worries about inflation. Morning News reporter Wang Nan