Report Industry Investment Rating The report does not provide an industry investment rating. Core Viewpoints - Upstream prices are gradually improving. The production - material price index declined slightly in the week of August 22, but the year - on - year decline since August has narrowed. Steel industry capacity and output will be precisely regulated, which is expected to drive a gradual improvement in PPI and a slow rise in long - bond interest rates [4][13]. - The strengthening of the RMB against the US dollar does not necessarily trigger a more relaxed liquidity supply. If Trump successfully replaces Cook, the proportion of "dovish" Fed governors may increase, leading to a decline in the long - term yield of US Treasury bonds. The strengthening of the RMB against the US dollar is conducive to stabilizing foreign investment, and its stability against the currency basket is conducive to stabilizing foreign trade [4][16]. - The US PCE inflation in July basically met market expectations and may have limited impact on the Fed's interest - rate cut prospects. However, the US trade deficit in July far exceeded expectations, mainly due to a sharp increase in imports, which may lead to intensified inflation and affect the interest - rate cut rhythm [4]. Summary by Directory High - Frequency Data Panoramic Scan - **Upstream prices**: The production - material price index declined slightly in the week of August 22, with a narrowing year - on - year decline since August. The steel industry's average annual added - value growth target for 2025 - 2026 is 4%. By August 29, the closing price of the coking - coal futures main contract was close to the December 2024 average, while that of the rebar main contract was significantly lower [4][13]. - **Exchange rate**: After Powell's hint at the global central - bank annual meeting and Trump's move to remove Cook, if Cook is successfully replaced, the long - term yield of US Treasury bonds may decline. The RMB has strengthened against the US dollar, but the RMB exchange - rate index is still not high, which is an ideal state [4][16]. - **Inflation and trade**: The US PCE inflation in July basically met expectations. The trade deficit far exceeded expectations due to a sharp increase in imports, which may be related to the tariff "grace period" and mild inflation, and may intensify inflation and affect interest - rate cuts [4]. - **High - frequency data changes**: In the week of August 30, the average wholesale price of pork decreased by 0.78% week - on - week and 27.43% year - on - year; the Shandong vegetable wholesale - price index increased by 2.54% week - on - week and decreased by 19.19% year - on - year. The prices of Brent and WTI crude - oil futures increased by 1.85% and 1.63% respectively week - on - week. The LME copper and aluminum spot prices increased by 1.13% and 1.52% respectively week - on - week [4][20]. High - Frequency Data and Important Macroeconomic Indicators Trend Comparison The report provides multiple charts to show the trend comparison between high - frequency data and important macroeconomic indicators, such as the relationship between LME copper spot - price year - on - year change and industrial added - value year - on - year change (plus PPI year - on - year change), and the relationship between crude - steel daily - output year - on - year change and industrial added - value year - on - year change [22][33]. Important High - Frequency Indicators in the US and Europe The report presents charts of US weekly economic indicators and actual economic growth rates, US first - week unemployment - claim numbers and unemployment rates, US same - store sales growth rates and PCE year - on - year changes, and Chicago Fed financial - condition indexes, as well as the implied prospects of the US Federal Fund futures for interest - rate hikes/cuts and the overnight index swap for the ECB's interest - rate hikes/cuts [88][90][93]. Seasonal Trends of High - Frequency Data The report shows the seasonal trends of high - frequency data through various charts, such as the seasonal trends of crude - steel (decade - average) daily output, production - material price index, and 30 - major - city commercial - housing transaction area [101]. High - Frequency Traffic Data in Beijing, Shanghai, Guangzhou, and Shenzhen The report provides charts of the year - on - year changes in subway passenger traffic in Beijing, Shanghai, Guangzhou, and Shenzhen [158][160][165].

Report Summary 1. Industry Investment Rating The provided content does not mention the industry investment rating. 2. Core View In August, the PMI data showed a combination of "manufacturing at the bottom and non - manufacturing moderately recovering". Compared with the "double - weak" situation in July, the short - term economic downward risk may be alleviated. With the weakening of the impact of high - temperature and rainy weather, the continuous release of policy effects, and the influence of seasonal factors, the economy is expected to continue the recovery trend, and the manufacturing PMI in September is expected to improve month - on - month, which may weaken the downward driving force of long - term interest rates [2][4]. 3. Summary by Related Catalogs August Manufacturing - The manufacturing PMI was 49.4%, up 0.1 percentage points from the previous value, still in the contraction range but showing marginal improvement. The non - manufacturing business activity index was 50.3%, up 0.2 percentage points, continuing to expand. The composite PMI output index was 50.5%, up 0.3 percentage points, indicating an accelerated overall expansion of enterprises' production and business activities [1]. - In terms of supply and demand, the production index was 50.8%, up 0.3 percentage points, with continuous expansion. The new order index was 49.5%, up 0.1 percentage points, with insufficient market demand. The new export order index was 47.2%, up 0.1 percentage points, with foreign demand hovering at a low level [2]. - In terms of prices, the purchase price index of major raw materials was 53.3%, up 1.8 percentage points, rising for three consecutive months and in the expansion range for two consecutive months. The ex - factory price index was 49.1%, up 0.8 percentage points, also rising for three consecutive months and reaching the highest point this year. It is expected that the year - on - year decline of PPI will continue to narrow, and the pressure on industrial product prices may be alleviated [2]. August Non - manufacturing - The service industry business activity index was 50.5%, up 0.5 percentage points, reaching the highest point this year. Industries such as capital market services, railway transportation, and aviation transportation were in a high - level boom range, while industries such as retail and real estate had weak prosperity. The business activity expectation index was 57.0%, up 0.4 percentage points, indicating that service enterprises were optimistic about the market [3]. - The construction industry business activity index was 49.1%, down 1.5 percentage points, in the contraction range, mainly due to the impact of high - temperature and rainy weather. The business activity expectation index was 51.7%, slightly higher than the previous month. Looking forward, with the weakening of the weather impact and the release of policies, the economy may continue to recover, and the manufacturing PMI in September is expected to improve [4].

Core Viewpoint - The August PMI indicates a divergence among industries, with manufacturing stabilizing slightly, service sectors improving significantly, and construction experiencing a notable decline. However, all three sectors show a common trend of improving sales prices [1][5]. Manufacturing Sector - The August manufacturing PMI stands at 49.4, slightly up from 49.3 in July, indicating a need for further support for actual growth [5]. - The production index is above 50 at 50.8, reflecting a stronger production performance compared to new orders, which remain below 50 [9][10]. - The consumer goods sector is a major drag on manufacturing PMI, while high-tech manufacturing shows strength, and both equipment manufacturing and basic raw materials industries show slight improvements [10] - The raw material purchase price index rose to 53.3, up 1.8 points, while the factory price index increased to 49.1, up 0.8 points, marking the third consecutive month of price increases [11][12]. Service Sector - The service sector PMI for August is 50.5, up from 50.0, indicating a positive trend influenced by capital market services, which have seen a business activity index above 70 for two consecutive months [5][10]. - Retail sentiment remains weak, suggesting challenges in consumer spending [10]. Construction Sector - The construction PMI dropped to 49.1 from 50.6, attributed to adverse weather conditions and a slowdown in construction activities [18]. - Fiscal spending on infrastructure showed a year-on-year decline of 3.6% in July, continuing a trend of low spending [18]. Economic Indicators - The three "soft indicators" for August reveal low absolute values, indicating a short-term economic slowdown compared to the first half of the year [19]. - Price indicators show a continuous improvement, which may influence future PPI trends [19]. - The manufacturing inventory index decreased to 46.8, while the raw material inventory index increased to 48.0, reflecting a proactive approach by companies to replenish stocks in response to rising prices [16][15]. Future Outlook - Attention is needed on the government's emphasis on stabilizing construction and actual growth, as well as whether the continuous improvement in PMI price indicators can translate into a rise in PPI [19]. - The manufacturing production expectation index rose to 53.7, the highest since April, indicating improved business expectations possibly linked to price expectations [17].

Manufacturing Sector - August manufacturing PMI increased by 0.1 percentage points to 49.4%, exceeding the market expectation of 49.1%[2] - Production index rose to 50.8%, up 0.3 percentage points from the previous month; new orders index increased to 49.5%, up 0.1 percentage points[5] - Large enterprises' PMI improved significantly to 50.8%, up 0.5 percentage points, while small enterprises' PMI rose to 46.6%, up 0.2 percentage points; medium enterprises' PMI fell to 48.9%, down 0.6 percentage points[5] Export and Import Trends - New export orders index rose to 47.2%, up 0.1 percentage points, indicating stabilization in export momentum[20] - Import index increased to 48.0%, up 0.2 percentage points, reflecting ongoing production expansion[20] Price Indices - Raw material purchase price index rose to 53.3%, up 1.8 percentage points; factory price index increased to 49.1%, up 0.8 percentage points, indicating a potential upward trend in PPI[25] - Raw material inventory index increased to 48.0%, up 0.3 percentage points, while finished goods inventory index decreased to 46.8%, down 0.6 percentage points[25] Service Sector - Service sector business activity index rose to 50.5%, up 0.5 percentage points from the previous month, and higher than last year's 50.2%[29] - The business activity expectation index for the service sector increased to 57.0%, indicating positive market sentiment[29] Construction Sector - Construction sector business activity index fell by 1.5 percentage points to 49.1%, continuing a downward trend for two consecutive months[32] - The decline in construction activity is attributed to adverse weather conditions and reduced demand from real estate and infrastructure investments[32]

Core Points - In August, China's manufacturing Purchasing Managers' Index (PMI) rose slightly to 49.4%, indicating a small recovery from July's decline, reflecting the initial effects of policies aimed at expanding domestic demand and reducing competition pressure [1][2] - The production index and new orders index both showed improvements, with the production index rising to 50.8%, remaining above the critical 50% mark for four consecutive months [1][4] - The manufacturing raw material purchase price index increased to 53.3%, indicating rising costs for manufacturers, which may pressure profit margins [2][3] Economic Indicators - The new orders index rose to 49.5%, while the production index increased by 0.3 percentage points, suggesting a stabilization in market demand and supply [1][2] - The export orders index improved slightly to 47.2%, indicating resilience in external demand despite previous challenges [2] - The manufacturing production activity expectation index rose to 53.7%, reflecting increased optimism among manufacturers regarding future market conditions [3][4] Policy and Market Outlook - The government is focusing on enhancing the effectiveness of macroeconomic policies to stimulate domestic demand and investment, particularly in the context of ongoing economic recovery challenges [4] - Analysts predict that as policy effects continue to materialize and with the upcoming peak production season, various economic indicators are expected to improve further [4]

Core Viewpoint - The Producer Price Index (PPI) in July showed a month-on-month decline of 0.2%, marking the first narrowing of the decline since March this year, indicating a potential stabilization in industrial prices [2][3]. Group 1: PPI Trends - In July, the prices in coal mining, black metal smelting, photovoltaic equipment manufacturing, cement manufacturing, and lithium-ion battery manufacturing saw a reduced month-on-month decline of 1.9, 1.5, 0.8, 0.3, and 0.1 percentage points respectively, contributing to a reduced downward impact on PPI by 0.14 percentage points compared to the previous month [3]. - The month-on-month decline in PPI was primarily influenced by a series of "anti-involution" policies that have led to a rebound in product prices in cyclical industries, as evidenced by the futures price trends of coal, steel, and cement [3][4]. Group 2: Year-on-Year PPI Analysis - The year-on-year PPI in July decreased by 3.6%, maintaining the same decline as the previous month, with the PPI growth rate remaining in negative territory for 34 consecutive months [4]. - The "anti-involution" policy is seen as a significant factor in the month-on-month improvement of PPI, addressing the core issue of low-price competition driven by supply-demand imbalances [4][5]. Group 3: Future Outlook - The ongoing "anti-involution" policies are expected to continue supporting the month-on-month improvement of PPI, but the extent of this improvement and whether the year-on-year growth can turn positive will require further observation [5]. - To solidify the effects of the "anti-involution" policies, it is crucial to restore domestic demand; otherwise, competitive pressures among enterprises may intensify [6].

Group 1 - The article discusses various economic indicators and events scheduled for September 2025, including employment data and manufacturing indices in the US and China [1][2] - Key dates include the US non-farm payroll report and the Federal Reserve's economic conditions report, which are critical for assessing economic health [1] - The article highlights the importance of consumer confidence indices in both the Eurozone and the US, which are expected to influence market sentiment [2] Group 2 - The article mentions the release of China's August trade balance and M2 money supply data, which are significant for understanding the country's economic performance [1] - It also notes upcoming monetary policy decisions from major central banks, including the European Central Bank and the Bank of Japan, which could impact global financial markets [1][2] - The article outlines the importance of oil inventory data in the context of energy markets, particularly in relation to US crude oil production [2]

Group 1 - The PCE index is considered a more comprehensive measure of economic inflation compared to the CPI, as it includes non-profit institution consumption and dynamically adjusts the weight of goods to reflect substitution effects [2] - The upcoming data will reveal the true extent of tariff cost transmission, with the full chain of cost impact from ports to retail having been completed since spring [2] - Despite signals of a policy shift from the Federal Reserve, high inflation may still limit the space for interest rate cuts, with economists believing that unless the upcoming August CPI shows a significant increase, the Fed's plans for a rate cut in September will remain unchanged [2] Group 2 - Consumer spending is expected to grow by 0.5% month-on-month in July, driven primarily by a surge in new car sales, with annualized sales reaching 16.4 million vehicles [3] - The growth in personal consumption expenditures is projected to slow down to 1.3% in the third quarter and further to 1.1% in the fourth quarter, influenced by rising prices and the job market [3] - The slowdown in consumer spending, a core driver of the U.S. economy, will directly constrain overall economic performance, leading to a more complex adjustment in the coming months due to inflation pressures and expectations of policy easing [3]

Group 1: Industrial Capacity and Economic Trends - As of Q2 2025, China's industrial capacity reached 186.7 trillion yuan, accounting for 135.7% of GDP, down from 144.9% in Q4 2022[11] - China's industrial capacity has undergone three expansion phases: 2018, 2021, and 2023-2024[14] - The first capacity surplus occurred in 2015-2016, the second in 2020 due to the pandemic, and the third began in 2023, driven by capacity expansion and weak demand[30] Group 2: "Anti-Involution" Policy Impacts - The "anti-involution" policy is expected to create a turning point for declining capacity surplus and rising PPI, improving corporate profitability[7] - Historical data shows that each resolution of capacity surplus and recovery of PPI has led to a bull market in capital markets[61] - The capital market is anticipated to enter a bull market as a result of the "anti-involution" policy, similar to past instances in 2016-2017 and 2020-2021[61] Group 3: Risks and Future Considerations - Risks include slower-than-expected progress on "anti-involution," geopolitical risks, and potential deviations from historical patterns[3] - The need for demand-side measures to balance growth dynamics is emphasized, as reliance on manufacturing growth may weaken[60] - Enhancing non-manufacturing dynamics is crucial for achieving balanced growth, with potential strategies including infrastructure investment and boosting consumer spending[60]

Group 1: Investment Rating - Not provided Group 2: Core Viewpoints - In July, the decline in profits of large-scale industrial enterprises narrowed, and the profits of the manufacturing industry, especially high-tech manufacturing, rebounded significantly year-on-year. Whether this trend can continue is worthy of attention. The implementation of anti-involution policies and the narrowing of the year-on-year decline in PPI are beneficial to the year-on-year recovery of industrial enterprise profits [3][14] Group 3: Summary by Relevant Content Operating Income and Profit - From January to July, large-scale industrial enterprises achieved operating income of 78.07 trillion yuan, a year-on-year increase of 2.3%. In July, the operating income of large-scale industrial enterprises increased by 0.9% year-on-year. The total profit was 402.035 billion yuan, a year-on-year decrease of 1.7%. In July, the profit of large-scale industrial enterprises decreased by 1.5% year-on-year [1][4] - From January to July, private industrial enterprises' total profit increased by 1.8% year-on-year, and in July, their profit increased by 2.6% year-on-year [4] - From January to July, large-scale manufacturing enterprises achieved a total profit of 3.02 trillion yuan, a year-on-year increase of 4.8%. In July, manufacturing profits increased by 6.8% year-on-year, 5.4 percentage points faster than in June [2][7] - In July, the profit of raw material manufacturing turned from a 5.0% decline in June to a 36.9% increase. The consumer goods manufacturing industry decreased by 4.7%, with the decline narrowing by 3.0 percentage points compared to June. The profit of high-tech manufacturing turned from a 0.9% decline in June to an 18.9% increase [2][7] - Industries with relatively fast year-on-year profit growth from January to July include the ferrous metal smelting and rolling processing industry (5175.9%), non-ferrous metal mining and dressing industry (39.1%), etc. Industries with relatively large year-on-year profit declines include the coal mining and washing industry (-55.2%), ferrous metal mining and dressing industry (-33.7%), etc. [8] Operating Income Profit Margin - From January to July, the operating income profit margin of large-scale industrial enterprises was 5.15%, a year-on-year decrease of 0.25 percentage points. The manufacturing industry was 4.46%, slightly higher than the same period last year but about one percentage point lower than the same period in 2019. The mining industry was 16.75%, still higher than the same period in 2019. The production and supply of electricity, heat, gas, and water was 6.92%, better than the same period last year and higher than the same period in 2019 [2][9] Asset - Liability Ratio - At the end of July, the asset - liability ratio of large-scale industrial enterprises was 57.9%, a year-on-year increase of 0.3 percentage points. The asset - liability ratio of large-scale manufacturing enterprises was 57.2%, a year-on-year increase of 0.1 percentage point. Both are at the highest levels for the same period in the past decade [3][10] Accounts Receivable and Inventory - At the end of July, the average collection period of accounts receivable of large-scale industrial enterprises was 69.8 days, a year-on-year increase of 3.4 days, and that of large-scale manufacturing enterprises was 70.8 days, a year-on-year increase of 2.9 days, both at the highest levels for the same period since 2015, putting pressure on corporate cash flow [3][13] - From January to July, the cumulative year-on-year growth of finished product inventory of large-scale industrial enterprises was 2.4%. Industrial enterprises controlled a small year-on-year increase in finished product inventory under the circumstances of falling ex-factory prices, negative year-on-year net profit growth, longer accounts receivable periods, and rising debt ratios [3][13]