China Recovery Stalls

Even if we assume that some of these factors are temporary, one data point should cause alarm. Both the manufacturing and non-manufacturing employment components are in contraction, indicating job losses. An economy that sees a temporary and allegedly irrelevant slump in PMIs should not reflect employment destruction.

The jobless recovery is an important risk all over the world. We are seeing a significant bounce in Gross Domestic Product (GDP) in many economies, but the figures of job creation and real wage growth are not just disappointing but concerning. Why? Because if jobs and disposable income do not recover faster, it will be difficult to see the big boom in consumption that so many economists rely on to justify the solid rise in economic growth for 2021.

China’s weakness is much more than a Lunar Year celebration slump. It is evident that the 2020 recovery was more fragile than what most commentators suggested.

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