Morgan Stanley highlights how leading economic and sentiment indicators are rolling over in China. For example, Chinese confidence in their income prospects has pulled back:
Morgan Stanley’s Business Cycle Signal has turned downward as well:
Still, they continue to view downward trends in the data as in-line with Chinese economic cooling efforts. Despite charts such as the above, Morgan Stanley still believes China is heading for a soft landing. Thus as we are likely to be hit with more falling Chinese data points, we probably need to remember that declining indicators aren’t necessarily bad news. Collapsing ones, though, probably are.
Although several key headline indicators registered a decline in year-over-year growth rates from the high levels achieved in late last year and early this year, in part reflecting the base effect, underlying growth momentum is still holding up reasonably well as demonstrated by resilient sequential growth rates.
(Via Morgan Stanley, Headlines Belie Underlying Resilience, Qing Wan, June 2010)