Something for your Espresso: Are Chinese services falling apart as well?
Markets reacting fiercely to the weakness in Services in China. Thus far in 2023, Services have held up on the back of the Reopening impulse, but it seems to be fading also in live-gauges of activity (See chart 1). This rhymes well with the overall narrative here in our “Services Week” . The weakest link in the economy is now Services globally and it will become increasingly evident over the next 2-3 months.
This underlines the importance for China in flooring sentiment in Real Estate, Construction and Manufacturing now that the reopening impulse is no longer enough to keep the sequential momentum going in Services.
Chart 1: Reopening impulse fading?
Kind of a shocker for markets with weakness in Chinese Services despite a weekend of benign news. The reopening impulse in Services is fading, which shows how important it is to stabilize Construction/Manufacturing.