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VIEW: BofAML write that "as lagging...........>

CHINA: VIEW: BofAML write that "as lagging indicators, labor data are likely to
soften in the coming months, following weaker activity growth data. Admittedly,
in December 2018, the BofAML China Activity Coincident Indicator (ACT) plunged
to 2.8%, already below the level of the previous bottom of 4.8% in October 2015.
Our analysis suggests the labor market has held up so far, potentially supported
by the structural trend in labor supply. In addition, the sectoral shift to
services implies higher labor intensity in the new economy, which absorbs excess
labors in the manufacturing sectors. That said, we expect the labor market to
face more challenges, especially in external and tech sectors, over the next few
quarters. Policymakers' bottom-line is social stability, crucially tied to
unemployment rate and job creation. With US-China trade risks still looming
large, we believe China will not hesitate to take pre-emptive measures to
stabilize expectations of job stability."
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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