Machinery industry: Expected mixed demand or lack of vitality

Hi: It is expected that the overall industry will be optimistic about the half-year. The prosperity of construction machinery, CNC machine tools, special chemical equipment and agricultural machinery is high. In view of the sales of the entire construction machinery in the first half of the year, the semi-annual report of the industry was optimistic. The machine tool industry is the most widely used industrial capital product in the application field. Sales show rapid growth while the profitability (product added value) increases rapidly. At the same time, the output of oil refining, metallurgical equipment and oil drilling equipment reached a record high in March, and the growth in the first half of the year is expected to exceed 30%.

On the whole, the market value of the large market value sub-sector is somewhat optimistic, and the overall industry growth rate is expected to be significantly higher than the GDP growth rate.

Worry: The monthly fluctuations in the growth rate of the industry have increased and the sustainability has yet to be tested. Analyzing the sub-industry data with higher prosperity, we found that the monthly fluctuations are large, and the sustainability of high booms remains to be tested, especially the latest May data. The growth rate has slowed down significantly. In addition, the long-term sub-sectors are weaker than the overall industry, and are still at the bottom of the cycle. For example, heavy equipment and some general-purpose equipments with longer order cycles have a more declining trend. We believe that the increase in the monthly fluctuations in the industry is still a result of the unstable demand side. The lack of investment in major projects may be the industry’s biggest concern.

Did not come to the point: investment and monetary policy have become two major factors. The real economy has a high degree of reliance on investment in projects, especially major projects, and it may continue for a long time. The "Twelfth Five-Year Plan" will enter the construction phase one after another, and the construction of the project will directly or indirectly affect the overall prosperity of the industry. Our study found that M2 growth rate and the trend of engineering machinery boom degree are the most fitting, so monetary policy may influence the future trend of the industry to a considerable degree.