The fall in credit in April, while unprecedented, can be argued away as reflecting a temporary shortfall in official bond issuance. It is more difficult to dismiss the equally unprecedented drop in M1 in the same way.
Data in yesterday's Q1 monetary policy report showed another sharp fall in mortgage rates to well below 4%. But while they worked before, rate cuts in this cycle have shown no sign yet of boosting buyer sentiment.
CPI deflation is stabilising, though because of food prices rather than domestic demand. The surprise in April was the lack of any lessening of PPI deflation, despite some improvement in leading indicators.
Core CPI inflation continues to run at a bit below 1% annualised. That is too low for comfort, though for now doesn't show any sign of taking a new step down into deflation.
Cyclically, wage growth has slowed from over 2.5% YoY in 23 to 1.4% now. But the structural rise in manufacturing wage growth is persisting, which will have macro significance if the sector convincingly lifts out of recession.
The big change in household behaviour isn't from spending into saving – in both respects, pre-covid trends have been regained. Rather, the shift is savings into bank deposits and out of financial and property investments. That matters for inflation, and for policy.
There was quite a big fall in the EW survey in April, a warning that recent JPY volatility might be pushing up inflation expectations again.
While a bit stronger than the beginning of this year, the household survey shows real consumption spending still 2% lower than in 2019.
Another chart that challenges the idea that the structure of China's economy has changed much. Relative to GDP, construction is rebounding, while manufacturing is falling.
It feels to us that, with so much of the market's focus being on $JPY and the MOF, not enough attention has been paid to the increasing confidence being expressed by the BOJ.
PMIs, CPI, wages, profits....most macro indicators look positive. The one weak spot remains consumption, with little sign of improvement through March.
Underlying trade values show the moderate export recovery that began in mid-23 is continuing, while imports are flat-lining.
Part-time wage growth is now finally reflecting the labour market tightness seen in survey data, and so supports the BOJ's confidence in the macro cycle.
The nominal export recovery across the region has lost momentum, with Taiwan's April exports fading YoY and MoM.
It is often thought that China is transforming into a mfg-led, services-light economy. Relative growth did slow post-15. However, as a proportion of GDP, the services sector has never been bigger.
It seems reasonable to think the cheap JPY is contributing to Japan's tourism boom. But Korea's visitor numbers are also closing in on pre-covid levels. Recovery in Taiwan, by contrast, is lagging.
Our monthly chart pack. Three themes stand out: the confidence of the BOJ; the significance of policy that tackles property inventories in China; and Taiwan remaining as the big post-covid winner.
Headline inflation dropped below 2% YoY in April, and core eased too. But underlying services inflation – a proxy for domestically generated price pressures – remains at almost 3%, a near 30-year high.
Prices might be drifting down a bit, and there's big product differences (steel weak, copper strong), but high-frequency data don't suggest any real deflation emanating from China's industrial sector.
The PMI shows strong services momentum and prices charged rising "at its steepest since April 2014...reflecting another sharp rise in input costs....which was mostly linked to greater salary payments."
PSL lending, which seemed like it might become a thing for 20204, hasn't: yesterday's April data showed no new lending, so with previous loans maturing, PSL outstanding has fallen back again.
The S&P PMI shows China's services sector continues to grow at a solid rate. The outlook also remains firm, with new business growing in April by the quickest rate in almost a year.
The market focus in on real wages, but the elderly are even worse off than workers, the result of a policy of deliberately cutting pensions in real terms.
A summary of what happened on East Asia Econ last week, and what to look for in the next seven days.
There continue to be signs that PPI inflation will turn positive in the next couple of months. That will ease an important source of investor concern.