The news from the critical housing sector, which is mired in a protracted slump, was less encouraging: Price falls accelerated in lower-tier cities. All of this makes a protracted fall in consumer prices—which could trap China in a 1990s Japan-like cycle of falling prices and ultra-thrifty consumers—less likely. The services sector purchasing managers employment subindex, which plummeted in line with construction employment this spring, has now begun rising again—although it remains below the 50 point mark separating expansion from contraction. Beijing needs to do more to put a floor under the housing market. And weakness in the property sector—which accounts for about a quarter of the economy—could undermine the entire job market again later in the year, like it did this spring and summer.

Source: Wall Street Journal September 16, 2023 19:04 UTC