Besides being affected by supply, the low expectation of PMI in manufacturing industry may be related to the weakening of internal and external demand support.

The PMI of manufacturing industry is low, and the drag on production and demand is significant.In July, manufacturing PMI recorded 49%, lower than the market average of 50.4% and 50.2% of the previous value, of which production and new orders fell 3 and 1.9 percentage points respectively from the previous month to 49.8% and 48.5%, respectively, dragging down PMI by 0.75% and 0.57%, respectively. New export orders and imports fell 2.1% and 2.3% respectively, which may point to weaker support for internal and external demand.

High energy-consuming industries are a significant drag, or partly affected by high temperature weather and so on.Among the major industries, the PMI of high energy-consuming industries such as textiles, oil and coal processing, and black smelting continues to be in the contraction range, which is lower than the overall level of the manufacturing industry, which is one of the main factors contributing to the decline of PMI; while the PMI of agricultural and non-staple food processing, food manufacturing, special equipment, automobiles, railway shipping and aerospace equipment and other industries is higher than 52.0%, and has maintained expansion for two consecutive months, and production and demand have continued to recover.

The prosperity of different enterprises has fallen, especially the demand of small and medium-sized enterprises.In July, the PMI of large, medium and small enterprises fell 0.4,2.8 and 0.7 percentage points respectively, all below the critical value. Among them, production and new orders of medium-sized enterprises were significantly dragged down, production and new orders fell by 5.3 and 4.6 percentage points respectively, while new export orders of small enterprises fell significantly, 4 percentage points lower than the previous month, more than 1.5 percentage points of new orders.

The PMI of the service industry fell, but was still in the range of expansion, and steady growth pushed the PMI of the construction industry to continue to rise.

PMI in both non-manufacturing and service industries fell, but remained within the range of expansion.Non-manufacturing PMI recorded 53.8 per cent in July, down 0.9 per cent from the previous month, with services PMI falling 1.5 per cent to 52.8 per cent, the second highest in nearly 13 months. 16 of the 21 industries surveyed were in an expansion range, with air transport, accommodation, catering, ecological protection and public facilities management more than 60.0 per cent.

Measures to stabilize growth continue to fall to the ground and have emerged at the micro level.In July, PMI in the construction industry rebounded 2.6 percent to 59.2 percent, rising for two consecutive months, and new orders in the construction industry rebounded 0.3 percent to 51.1 percent for three consecutive months, with business activities, new orders and employees in the civil engineering and construction industry all improving. Correspondingly, asphalt operation rate and cement shipment rate all rebounded for several weeks in a row, or the effect of pointing to stable growth gradually appeared.

To reiterate the view: the effect of stabilizing growth may gradually emerge, and the impact on the pace and elasticity of economic repair still needs to be tracked.Capital "pre-position" brings investment growth and actual landing or "dislocation", which may support demand or gradually appear; but demand repair may face the "ceiling", the closer to the terminal "ceiling" may be lower. The differences in macro and micro environment may make this round of post-epidemic restoration not a simple copy in the past.

Risk Tips:

1. the effect of the policy is not as good as expected.

2. The epidemic situation is repeated.