More recently, the national statistical office published ppi data for july, with a comparative value of 4. 4 per cent, a decrease of 1 percentage point from the previous month and signs of marginal improvement over the same period. In july, the ppi rate returned to -0. 2 per cent (previous value -0. 8 per cent). By sub-section, the price of downstream means of livelihood increased in general, and the price of means of production declined in a narrow way, with the extractive, raw materials and processing industries contracting by 3. 4, 1. 2 and 0. 2 percentage points, respectively. In terms of analysis of data from different sectors, there has been a narrowing of the price decline in the coal mining and washing industries, the manufacturing of chemical raw materials and chemicals, and the metal smelting and processing industries, as well as in the domestic oil and gas mining industry, non-ferrous metal smelting and the processing industries, the price decline in the manufacturing industry for the medium-range general equipment has continued to rise, the manufacturing ring for computers, communications and other electronic equipment has moved from flat to higher, and the price reduction in the automobile manufacturing industry has been reduced by a narrow margin。
Ppi shows up at speed point
According to an analysis by the financial and data centre of the grand bay (gangdong) in port-au-prince, the ppi ring comparison data were more evident in july, influenced by the international price hike in crude oil and the rise in non-ferrous metals prices. As the effect of the high base figure gradually subsided, the ppi ratio was lower in the year or had appeared in june, and the ppi ratio in the second half of the year was expected to be moderate and narrow, and the trend analysis of recent high-frequency (hf) data related to industrial goods and large commodities had to some extent confirmed the emergence of a turning point。
On the one hand, the cbb spot index, the south china industrial product index and the bulk commodity price index were more relevant than the ppi in terms of aggregate indices, and data for the period august 2014 to july 2023 showed that the ppi ratio for the same month exceeded 0. 8 per cent and was more correlated with fluctuations. Overall, the impact on the ppi was essentially over the same period or one period behind. In july, the cbb spot index, the south china industrial product index and the commodity price index generally performed better than in june, with average levels rising by 1. 9 per cent, 5. 2 per cent and 2. 3 per cent, respectively, while since august, the south china industrial goods index and the commodity price index for bulk commodities have continued their july rebound, increasing by 2. 5 per cent and 4. 2 per cent, respectively, compared with the july average, as of 18 august (update data)。
On the other hand, the impact of commodity prices tends to be transmitted mainly to relevant sub-items upstream of ppi. In terms of specific commodity categories, fluctuations in prices of non-ferrous metals can directly affect non-ferrous metal-related sub-divisions through industrial transmission, with direct effects on the upper caycoline, coke, iron ore and powered coal, as well as on the downstream screwdrivers of the black industrial chain, to the black metal mining and metal smelting and scalding industries, with the crude oil category affecting mainly oil and chemical-related sub-divisions, with relatively broad impacts covering oil and gas mining, oil, coal and other fuel processing industries, chemical raw materials and chemicals manufacturing, chemical fibre manufacturing, rubber and plastics industries。
An analysis of crude oil prices, for example, shows that the real price of brent crude oil, compared to the ppi for the same month, and the related coefficients for the above sub-indicators can average 0. 89, which is more relevant overall. In july, brent crude oil prices generally surged, rising by 6. 2 per cent on average compared to june, into august, when international crude oil prices continued to rise and in early august prices rose to high levels in the last six months. On the supply side, the opec+ countries have been reducing production since last october. Recent opec monthly reports indicate that the global crude oil market supply gap this quarter will exceed 2 million barrels per day as a result of continued cuts in saudi production, while the current period is marked by high demand in the northern hemisphere, high consumption of stocks in developed countries. In the short term, tight supply and better demand will collectively support oil prices, thus continuing to boost crude oil chain-related prices in ppi。
Ppi's fifth to negative growth
While the warming of large commodity prices points to a relative improvement in the ppi relative margin, the duration of the negative ppi phase will still require a combination of factors. As of july, the current round of ppi growth had been negative for 10 months, starting with the first year of ppi increase in october 2022. In fact, since 2000, ppi has experienced four rounds of negative growth: from april 2001 to november 2002, from december 2008 to november 2009, from march 2012 to august 2016, and from july 2019 to december 2020, the lowest points were in february 2002, july 2009, december 2015 and may 2020。
In the past four rounds, the bottom depth of the ppi was “deep”, with an average of 5. 48 per cent for the four rounds, the lowest historical point being -8. 22 per cent in july 2009. The current low point of negative growth for the current round was 5. 4 per cent in june 2023, slightly above the average of the bottom of the four rounds; the average duration of negative growth for the four rounds was 26 months, with a maximum of 54 months and a minimum of 12 months. Taken together, experience has shown that the recovery of the ppi from negative growth levels has often been accompanied by global economic recovery, a halt in trade and a rise in external demand has driven domestic export rebounds, domestic expansionary policies, such as active fiscal and monetary policies, have been effective in boosting domestic demand, industrial production has increased, consumption has recovered, especially efficient warming of real-estate demand, and internal and external repairs have increased demand for energy and various raw materials, leading to growth in related commodity prices and pushing the ppi out of negative growth zones。
An analysis by the financial and economic data centre of the bay of hong kong (gangdong) concluded that the end of the ppi negative state of the current round would be more dependent on the rehabilitation of the domestic market. In the global economy, despite the decline in inflation in the united states as a whole and the fact that the market has heard the us federal reserve's interest rate hike or near end, markets are under financial pressure in the context of austerity policies, with higher downside risks, while inflationary pressures remain relatively high in the euro area, such as germany's ppi in july, which was the largest decline in the last 14 years, and the eurozone's interest-rate cycle or short-term difficulties, overall external demand remains under pressure, with a more limited boost to large commodity prices over the medium and long term; and domestic sales remain relatively low in august, as measured by high-frequency indicators, such as 30-city stock exchanges, and demand-side fatigue or demand for raw materials that will continue to affect land-related chains, as cement prices have remained low since this year。
It is a matter of concern that the housing market has recently been actively advocated throughout the country and that policies are being put in place to stabilize the market. Central bank interest-rate initiatives are also expected to stimulate credit demand and further support economic development. With these factors combined, domestic demand is expected to gradually recover, and it is reasonable to assume that the ppi will show some positive changes, taking into account the above-mentioned analysis of the relative relevance of commodity price trends to ppi。
While the global economy faces some uncertainty, the ppi movement may pick up as domestic policies come into effect and the external environment stabilizes. Economic development is, of course, affected by a number of factors, including the international political situation, the global balance between supply and demand. We will therefore remain cautious and continue to follow closely the changes in economic indicators and the impact of policy adjustments on the economy and to follow up on ppi trends in the second half of the year through the analysis of relevant data。
