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Go figure. On heels of market meltdown, China’s Leading Economic Index increases

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Go figure.  On heels of market meltdown, China’s Leading Economic Index increases

Future prospects look less optimistic.

In contrast to the turmoil in Chinese markets, and generally downbeat economic news from the world’s second largest economy, The Conference Board Leading Economic Index for China increased 0.9% in July, following a 0.6% increase in June and a 1.1% increase in May.

China's economy will be facing increasing downside risks in the months ahead."

Total loans issued by financial institutions made the largest positive contribution to the index, followed by the 5000 industry enterprises diffusion index: raw materials supply index, and total floor space started.  The consumer expectations index, The PMI new export orders index, and the (inverted) PMI supplier delivery index declined in July.

"July's gain in the Leading Economic Index for China was driven mainly by bank loans, while consumer sentiment, manufacturing, and exports were all weak," said Jing Sima, senior economist at The Conference Board. "Despite the gain, the increased volatility in the LEI, lack of strength in the real economy, and recent turmoil in China's stock and currency markets suggest that China's economy will be facing increasing downside risks in the months ahead."

The Conference Board Coincident Economic Index for China, which measures current economic activity, increased 1.1% in July, following a 0.2% increase in June and a 0.6% increase in May. Four of the five components contributed positively to the index in July.

 

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