Needed, Proactive Policy Action
The weakness in PMI in the run-up to GST may have something to do with the pressure to clear stocks. But it also suggests continuing lacklustre output growth, and consequently, the need for proactive policy action. Lagging indicators, typically “output” oriented, are easy to measure but hard to improve or influence upon at least in the short-term. In contrast, leading indicators are input oriented, harder to measure and often easier to influence. We need a set of both leading and lagging indicators to keep better tab on economic activity.