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The drop in the Caixin services PMI mirrors the fall in its official counterpart and provides further evidence that the trade war is weighing on economic activity in China, even beyond the manufacturing sector. The most striking detail from today’s release was the future activity index, which fell to its lowest on record, initial COVID lockdowns aside. While some caution is clearly warranted, we suspect that firms are overestimating how much damage US tariffs will do.
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