Since July, US macroeconomic momentum has weakened substantially. We are now back on a negative trajectory for cyclical growth, with signs of fading momentum in some service sectors, including leisure and hospitality.

In the spring, we observed a significant build-up of orders relative to inventories as manufacturers sought to bypass the latent pressure from trade tariffs by front-loading activity. This is evident from both a Western orders perspective and Chinese export data.

What goes up due to tariffs will likely come down for the same reason, and that’s what we are currently observing in our data. China has slowed due to a “pause in orders,” as activity was front-loaded ahead of the tariffs.

What happens in China if Western demand continues to weaken, adding to the “pause” already caused by tariff circumvention?

Chart 1a: The cycle is weakening again

Chart 1b: Massive front-loading of Chinese exports due to trade-tariffs