What are the highlights of the macro "transcript" in the first quarter? Infrastructure investment to stabilize the recovery of market consumption is expected to continue

According to preliminary calculations, gross domestic product (GDP) grew 4.8 per cent year-on-year in the first quarter of 2022, up 1.3 per cent from the fourth quarter of last year, according to data released by the National Bureau of Statistics. Judging from the main economic indicators, the scale of investment in fixed assets has expanded and industrial production has maintained steady growth. However, under the influence of the epidemic and other factors, the overall consumption data is in a slow state, and the real estate sales area and amount still maintain negative growth compared with the same period last year.

Industry insiders pointed out that China's economy as a whole remained stable in the first quarter, and the impact of short-term disturbance of the epidemic on stable economic growth was relatively limited.

Wen Bin, chief researcher of China Minsheng Bank, believes that this year, policies rely on forward development, local government special bonds issue ahead of schedule, and support moderately advanced infrastructure investment, which has accelerated the growth of infrastructure investment and become an important starting point for stable growth.

Fu Linghui, spokesman for the National Bureau of Statistics and director of the National Economic Statistics Department, said today that the world situation has been complex since March, the impact of the domestic epidemic has continued, and some sudden factors have exceeded expectations. The growth rate of some major indicators has slowed and the downward pressure on the economy has increased. However, the fundamentals of China's long-term economic improvement have not changed, the situation of sustained economic recovery has not changed, and the characteristics of great potential for development, resilience and wide space have not changed.

Infrastructure investment is growing faster.

Data show that in the first quarter, national fixed asset investment (excluding farmers) totaled 10.4872 trillion yuan, an increase of 9.3 percent over the same period last year and 4.4 percentage points higher than last year in 2021. On a month-on-month basis, fixed asset investment (excluding farmers) increased by 0.61% in March from a month earlier, a slight contraction of 0.05 percentage points from February this year.

In terms of sectors, infrastructure investment in the first quarter continued the strong trend since the beginning of the year, growing by 8.5% year-on-year, 0.4 percentage points higher than in the first two months of this year; manufacturing investment increased 15.6% in the first quarter compared with the same period last year, down 5.3 percentage points from two months, but still higher than the 13.5% growth rate for the whole of last year.

Luo Yingyi, a senior macro researcher at the Plant Trust Investment Research Institute, believes that the increased issuance of special bonds and the implementation of large-scale infrastructure projects jointly promote a further rebound in the growth rate of infrastructure investment; the pick-up in external demand and the good operating conditions of enterprises have promoted the relatively rapid growth of investment in the manufacturing industry.

"Infrastructure is an important support for economic growth of 4.8% in the first quarter, and if we look at broad infrastructure, the growth rate has reached 10.5%." The Soochow Securities Macro Research team pointed out that under the impact of the epidemic, the role of infrastructure in stabilizing growth has become more prominent, with power, water conservancy and transportation still playing an important role in stabilizing the economy in the first half of the year, but as real estate and consumption stabilize in the second half of the year, infrastructure investment growth is expected to slow down.

The steady growth of industrial production in the first quarter faces a small disturbance in one month.

According to the data, the added value of industries at and above the national scale increased by 6.5% in the first quarter compared with the same period last year, 2.2 percentage points faster than in December 2021. In a single month, industrial production at and above the national scale increased by 5.0% in March compared with the same period last year, down 2.5 percentage points from the first two months of this year. In March, the added value of 37 of the 41 major industries maintained year-on-year growth.

Market participants said that the rebound of the epidemic has led nearly 20 provinces across the country to adopt closure and shutdown measures one after another, affecting the flow of raw materials and labor, and causing intermittent pauses in industrial production. In spite of this, the industrial growth rate of 5.0% in March still reached the pre-epidemic level, showing the strong resilience of China's industrial production.

Wen Bin believes that the slowdown in production in March was mainly affected by the rebound in many outbreaks, while international commodity prices continued to rise, and the rising cost of raw materials had an impact on enterprises.

"in the next stage, international commodity prices are more likely to fluctuate at a high level." Fu Linghui pointed out that in terms of supply, the decline in production of related products as a result of the geopolitical conflict between Russia and Ukraine, as well as increased export controls, will have an impact on global commodity supply. In terms of demand, the continued recovery of the global economy will support the growth of demand for commodities. In anticipation of supply shortages, some commodity importers have increased demand for hoarding, exacerbating the imbalance between supply and demand. At the same time, due to geopolitical conflicts brought about by sanctions and anti-sanctions between some countries, making commodity transport and transaction costs higher, increasing price pressure.

Consumption in March is still dragged down by the epidemic, but it does not hinder the recovery.

Statistics show that retail sales of consumer goods in China totaled 10.8659 trillion yuan in the first quarter, an increase of 3.3 percent over the same period last year and 3.4 percent lower than in the first two months of this year. After deducting the price factor, the total volume of retail sales of consumer goods increased by 1.3% in real terms in the first quarter compared with the same period last year. In March, retail sales of consumer goods totaled 3.4233 trillion yuan, down 3.5 percent from the same period last year.

Zheng Houcheng, director of the Securities Research Institute of British University, analyzed that the COVID-19 epidemic had a direct impact on agglomeration and scene consumption, reflecting that retail sales of catering income in March were only-16.4% year-on-year. Structurally, automobile consumption ranks first, with retail sales of automobiles only-7.5% year-on-year in March, returning to a negative growth range. Automobile consumption, as a large amount of durable goods consumption, is closely related to the macroeconomic trend and the growth rate of residents' income.

"although affected by the recent epidemic, consumption growth has been restrained to a certain extent, but the recovery trend of consumption will not change, and the role of consumption 'ballast stone' will still appear." Fu Linghui said that in the first quarter, the final growth in consumer spending accounted for 69.4% of economic growth, still the largest contribution of the three major demand. As the impact of the epidemic is gradually brought under control, the employment priority policy will continue to promote the improvement of residents' spending power and willingness to spend.

Real estate sales continue to decline in the middle of the year may usher in becoming a regular employee

Data show that in the first three months of this year, national investment in real estate development totaled 2.7765 trillion yuan, an increase of 0.7 percent over the same period last year, down 3 percentage points from the previous January to February. Market participants pointed out that although real estate investment is still facing some downward pressure, but the "stable property" policy to protect it from obvious stall.

Chen Xiao, a senior analyst at Zhuge Housing data Research Center, believes that since the beginning of the year, positive signals have been released frequently from the central end to the local end, but from the performance of the data, the investment confidence of real estate enterprises has not yet recovered obviously. it is expected that it will take some time to transfer from the policy side to the investment side.

From the perspective of sales, from January to March, the area of commercial housing sales fell 13.8% from the same period last year, and commercial housing sales fell 22.7% from the same period last year, down 4.2 and 3.4 percentage points respectively from the first two months of this year.

Market participants believe that the sales area and amount continue to grow negatively compared with the same period last year, on the one hand, affected by a relatively high base in the same period last year; on the other hand, the policy effect has not been fermented in the short term, and the wait-and-see mood of the market has not been significantly improved.

According to Chen Xiao's analysis, in terms of monthly turnover, second-hand housing transactions reached the year's peak in March, with 68000 units sold, up 57.1 percent from the previous month. Thus it can be seen that market sales have gradually improved in March. "with the gradual expansion of cities regulated by property market policies, sales data are expected to usher in the possibility of becoming regular year-on-year in the middle of the year."

As for the trend of real estate in the next stage, Fu Linghui pointed out that although the current real estate sales are declining, with the appropriate liberalization of purchase restrictions in many places, lowering the threshold for the use of provident funds, speeding up the examination and approval of housing loans, and so on, housing demand in some cities has been released, and the decline in sales area has narrowed.