Watch the PMIs (or the CAP), not the Conference Board

The negative reaction to what was in other respects an unimportant downward revision to the Conference Board’s leading indicator for April probably says more about the fragility of market confidence than the state of China’s economy. Our own China Activity Proxy (CAP) is already available for May and confirms that growth has been weakening for some time. (See our China Activity Monitor, published on Monday.) This message was reinforced by the more timely PMIs for June, released today.

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