Green shoots emerge for Chinese economy

Pantheon Macroeconomics with the note:

Key Points:

The Caixin PMI probably understates the depth of the service sector downturn right now.
The official services index shows a plunge, while movie ticket sales almost halved over New Year.
But big cities report Covid cases have peaked, and we expect a reopening recovery from Q2 onwards.

Services Activity is likely in Steep Decline, but Green Shoots Emerge

The headline Caixin services index climbed 1.3 points to 48.0 in December, a level well above the lows of 36.2 in April 2022 and 26.5 in February 2020. We find this unbelievable given the surging deluge of Covid cases in December, leading people to stay at home and wait for the wave to subside.

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About the author

Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.