The better tone of the headline Caixin services PMI in July wasn't reflected in the commentary: "Instances of service providers raising selling prices.....were offset by others lowering selling prices to support sales.". The level of business confidence was "the second-lowest since March 2020".

Whatever else might be true, the BOJ isn't changing policy at a time of cycle weakness. The full PMI confirmed the strength of the flash, with firm employment, "marked" inflation and robust business confidence. That was all true even though foreign demand contracted.

It really is striking that while policymakers have been trying to stabilise the property market for months, construction price data show no let up in the pain. Indeed, if anything, through late July it looks to be getting worse.

Services inflation had already bottomed at above 2%, and now it looks to be trending up again. As a big component of domestically-generated inflation, a rise in services inflation will make it much more difficult for core and thus overall inflation to stay at the BOK's 2% target.

The industrial cycle still lacks some of the momentum that we have been expecting, with the manufacturing PMIs easing back in July. However, the services PMI continues to hold up, suggesting overall activity in Taiwan remains strong.

It looks increasingly likely that Korean export growth has stalled. Exports grew by around 10% a year each month in the first half of 2024, and equities are pricing a similar rate of expansion in the second. That's not much when the domestic cycle remains weak.

After the August PMIs, there's less room to think the economy is continuing to muddle through. Until now, the weakness of the official mfg PMI has been offset by strength in the Caixin version. Today's fall closes that gap, suggesting that even sectoral bright spots are now dimming.

Although mainly as capex, exports are feeding into domestic demand in Taiwan in a way that isn't yet visible in Korea. Data today show three-quarters of the 5.1% YoY rise in GDP in Q2 coming from investment, with the remainder being consumption. The contribution from net exports turned negative.

The weakness of retail sales in China and Japan is well-known. Less appreciated is the same theme is true in Korea too, with today's June volume data dropping back to 2019 levels. Only in Taiwan do retail sales show any strength, which is important when Taiwan's export story is the strongest too.

The government's monthly Monitoring Indicator shows economic momentum is about as strong as it gets. That suggests another robust print for GDP when Q2 data are released tomorrow. It also keeps pressure on the central bank.

As has been the case for months, hard data show no big change in the labour market: UE is low, and employment high. But the BOJ seems to think the labour market is tighter than these data suggest, placing more weight on the bigger change shown by the Tankan.

At least through July, softening inflation has been making consumers feel happier. Likely, the recent typhoon damage will at least cause a pause. And while the price slowdown in theory helps the CBC, there's also the risk of aggregate demand remaining stronger for longer.

The CPB data do show that China's export price cycle is somewhat weaker than ROW. But the gap isn't that big, and the trend is similar. Particularly in the context of all the talk of over-capacity, the differences really don't look that big.

I don't think the BOJ is particularly data-dependent when it comes to headline monthly releases, which tend to be noisy. To the extent that today's July Tokyo CPI does matter, it suggests the underlying story remains unchanged.

The BOK business sentiment survey continues to point to two very different dynamics: an export recovery that looks increasingly solid, and a downturn in the domestic economy that shows no sign of bottoming.

Core services PPI inflation in June rose 3% YoY for the first time since the early 1990s. This offers evidence of the BOJ's hoped-for virtual wage-price dynamic, with the annual rise in services PPI being led by high labour cost sectors.