September 2016 China Industrial Composite Index (ICI) Analysis Report

China Industry Economics Industrial Economic Research Center

In September 2016, the China Industrial Composite Index (hereinafter referred to as ICI) was 49.4%, a slight increase of 0.3% from the previous month, and the overall situation of the industrial economy was stable and good. The ICI manufacturing index was 51.0%, which was basically the same as last month. It continued to stabilize above the equilibrium line, indicating that economic stability is operating in the expansion zone. The benefit status index was 49.8%, which was 0.3% lower than that of the previous month, indicating that the overall profitability of industrial enterprises declined slightly. The ICI expectation development index was 50.5%, up 0.1% from the previous month, indicating that the company's confidence in the development of the market is stable. There was a rise, and the outlook was optimistic; the ICI business environment index was 48.0%, which was basically the same as last month, indicating that the market environment was stable. Among them, the tax burden index was 49.1%, a decrease of 1.4 percentage points from the previous period, indicating that the company The tax burden was slightly increased.

Production is improving
In September, the production status index was 49.9%, up 2.8 percentage points from the previous month, and the production status of enterprises was greatly improved. Specifically, the output index was 49.5%, which was basically the same as last month, indicating that the output of the company was relatively stable; the sales index was 52.5%, which was a 3.8 percentage point higher than the previous period, and the sales volume of products increased significantly; the ex-factory price index was 45.4%, and the chain increased by 3.5. In percentage points, with the increase in market demand, purchases and sales have become more active, and sales prices have also increased. However, we should see that the price index is far below the equilibrium line, indicating that companies are still dissatisfied with the sales prices of current products.
A slight drop in efficiency
In September, the benefit status index was 49.8%, which was 0.3% lower than the previous month, indicating that the overall profitability of industrial enterprises has declined. Specifically, the profit index was 52.5%, a 3.5% increase from the previous quarter, indicating that the increase in product prices had a positive impact on corporate profits. The corporate profit index rose sharply; the cost index was 48%, a decrease of 2.7 percentage points from the previous quarter. This actually reflects the increase in production costs of enterprises. This is due to the continuing enthusiasm in the raw material market and the sharp increase in prices, which has caused the company’s cost burden to continue to increase. The finished goods inventory index was 53.3%, a decrease of 0.3 percentage points from the previous month, indicating that enterprises Increased sales efforts, but the speed of production exceeds the speed of sales, so inventory has increased.

Steady overall operating conditions
In September, the operating environment index was 48%, which was basically the same as last month. As the overall market continues to be standardized, all business entities are basically operating in accordance with market rules, so the overall operating conditions of the market remain stable. Specifically, the tax burden index was 49.1%, a quarter-on-quarter decrease of 1.4 percentage points; the financing difficulty index was 38.8%, up 0.3% from the previous quarter, indicating that the difficulty of financing has slowed, but the index is far below 50%. The equilibrium line shows that the financing of enterprises, especially private enterprises, is still quite difficult; the market order index is 52.2%, up 0.4 percentage points from the previous month, and the index is above the equilibrium line, indicating that companies are more satisfied with the current market environment.
Businesses are optimistic about future development
In September, the expected development index was 50.5%, which was a 0.1% increase from the previous period. The current overall market demand environment is relatively good. The overall economic situation is gradually improving and continues to operate in the expansion channel. Therefore, business confidence is strengthened and the outlook is optimistic. Specifically, the pre-judgment index for future operating conditions was 63.1%, up 1.6 percentage points from the previous month, indicating that the company was full of confidence in the market; order volume index was 52.2%, down 1.4 percentage points from the previous month, and the market had orders for future orders. The decline, but still maintained above the equilibrium line, shows that the company is full of confidence in the future market demand; future R&D investment is 51.1%, 0.8% higher than the previous month. The company is full of confidence in the future market environment and its investment in R&D is also correspondingly increased. .
ICI's manufacturing index is flat
In September, the ICI manufacturing index was 51%, which was the same as last month. In September, the manufacturing PMI remained flat at 50.4%, maintaining the highest level since November 2014. The trend of ICI and PMI is consistent, and both are above the equilibrium line, indicating that the current positive factors of economic operation have increased, both the supply and demand in the market have risen, and the confidence of enterprises has increased. The expectations are good and the overall trend has stabilized. However, the foundation for stabilization is still not solid, and sustainability needs to be observed. In September, the economy showed five major characteristics: production remained steady and there was a rise; market demand picked up, supply and demand conflicts eased; supply-side reforms continued to advance, structural adjustments showed further effects; corporate procurement activities accelerated; and business confidence increased. The performance of the index reflects the upward trend in market demand. The combination of market prices has increased and the increase has increased. Business confidence has been further strengthened, production activities have been further restored, and economic growth has begun to show a trend of stability.
Without looking at the short-term outlook, there is still some support, but the sustainability and strength still need to be further observed. The favorable factors are as follows: First, the third batch of PPP demonstration projects to be announced by the Ministry of Finance will far exceed the first two batches in terms of quantity and amount, which is expected to boost the prosperity of the manufacturing industry; second, the “golden nine silver ten” season The demand side rebounded still has some support. In terms of unfavorable factors, first, the supply-side reform will accelerate in the second half of the year; second, the continued rise in ex-factory prices will still need to be screened. This month, the increase in the prices of some industrial products has narrowed, and rebar and other products have even fallen from an upward trend. Judging from the large macro background, industrial production in September continued its stabilization trend in August, but it is still weak and the foundation is still not firm. The sustainability of production-end improvement depends on changes in the demand side, and overall demand in October is overall. Judgment has no obvious signs of improvement, so the market outlook will remain stable and within a narrow range.

The overall situation is good

In September 2016, the expected growth index of China's industry was 50.5%, up 0.1% from the previous month. Currently, the overall market demand environment of the company is relatively good, and the overall economic situation is gradually improving and continues to operate in the expansion channel. Therefore, business confidence is enhanced. , optimistic about the market outlook.