Packaging / Advertising & Office

August is about to end, and the packaging industry will usher in an uncertain September. What is the market situation in the next month? Please see Bao Xiaobian’s analysis.

Today, the National Bureau of Statistics and the Federation of Logistics and Purchasing released the August China Manufacturing Purchasing Managers Index, with a PMI of 50.1%, a decline for five consecutive months, indicating that the manufacturing industry is continuing to shrink. The new orders index fell below 50% in August, a significant decrease from the previous month.

Affected by the continued increase in energy prices, the sharp fall in consumer confidence in Europe and the United States, and the lack of domestic demand, it is expected that the manufacturing sector will remain in a difficult situation of stagflation in September. Taking into account the consumption and increase of national infrastructure and consumption, September will be a greater test for the packaging industry. It is not ruled out that small and medium-sized contracting enterprises that are facing the pressure of repaying loans may be eliminated.

Let's take a look at the trend analysis of the manufacturing industry in August:

In August, new export orders continued to fall by 1.0 percentage point to 46.7%, which was in a contraction range for 4 consecutive months. The main cause was the triple pressure of exchange rate, freight rate, and raw material price increase, as well as the gradual return to normal after the overdraft of US and European orders. In August, import orders fell by 1.1 basis points to 48.3%, which was in the contraction range for three consecutive months, which proved the slowdown of the domestic economy and the decline in demand.

On the price side, August raw material prices and ex-factory price indexes fell 1.6 and 0.4 percentage points respectively from the previous month. The gap between the two was 7.9 points, which continued to narrow from July's 9.1 points, but the prices of raw materials were still high. It is expected that the CPI in August will continue to decline year-on-year, and the scissors gap between PPI and CPI will remain at a historical high, and the packaging industry in the midstream will be under great pressure.

On the inventory side, the August PMI raw material and finished goods inventory index changed 0.0 and 0.1 percentage points respectively, basically the same as the previous month. In August, the off-season of production, coupled with the early end of the export season, raw material inventories fell to a low of 47.7%. In September, the packaging industry entered a period of passive replenishment, and it is expected that upstream material manufacturers will set off a wave of price increases.

On the demand side, the consumer confidence index in Europe and the United States continues to decline, and the Halloween and Christmas inventory has been fixed in advance, and it is expected that export orders will be quieter. Domestic demand may be due to repeated epidemics and reduced residents' incomes, and domestic orders will be significantly weaker year-on-year due to the impact of the school season.

The prosperity of SMEs is still low, and the employment situation is deteriorating. In August, the PMI of small and medium-sized enterprises rebounded by 0.4 percentage points to 48.2%, but it has been in a contraction range for 4 consecutive months, and the pressure on production and operation of enterprises is still high. Judging from the reality, a large number of small and micro packaging companies have nothing to do, and their employees are half laid off. Increasing competition will make it difficult for these companies to survive, and the tide of elimination is in sight.

To be honest, the packaging industry will face the biggest challenge since 1992, which can be described as a major change unseen in 30 years. The demand side is extremely weak, industries are being replaced with new ones, and economic uncertainty has increased. Many people need to change their thinking to deal with future livelihoods.