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China - July PMI
The headline PMI was weak in July, and the details were soft too. There's no sign of the cycle finding a durable floor.
Paul Cavey
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Japan – July consumer confidence
The negative correlation between inflation expectations and consumer confidence continues to hold. So, with inflation expectations rising, consumer confidence is falling quickly.
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Japan – June/July inflation
Various releases this week show that inflation is still rising and broadening, and that there's likely more to come. However, price pressures do continue to be driven more by global than domestic factors.
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Japan - June labour market
The labour market is reasonably tight. Further modest tightening is probable, but a real squeeze is unlikely when labour demand isn't rising, but the participation rate is.
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Korea – August business sentiment
Business sentiment and price indicators remain at high levels. That justifies more BOK tightening in the short term. But there are some signs of change ahead, with exporter sentiment clearly down from the peaks, and inflation leads also falling.
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Korea – July consumer confidence
While consumer confidence fell in July., the bigger story is the very sharp rise in inflation expectations.
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China – taking stock
China's export market share gains show local firms remaining competitive, and that should make some individual equities interesting. But macro trends don't look strong enough to lift rates. Indeed, price indicators look more deflationary than inflationary.
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Japan – June CPI
June CPI was still quite strong. But there aren't signs of a transition from goods to services price inflation. Without that shift occurring, the BOJ has justification for arguing that inflation isn't broad-based, and thus that policy doesn't need to change.
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Japan – June foreign trade
Exports in volume terms are going sideways, but surging in JPY terms. The JPY value of imports is rising even more quickly, causing further deterioration in the trade surplus.
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July – Korea July 20d trade
Like Taiwan export orders for June, Korean export data for the first 20 days of July also point to some resilience in overseas demand.
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Taiwan – June export orders
Incoming data remain mixed. However, the picture seems to be that exports have peaked, but remain somewhat resilient.
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China - taking stock
As remarkable as the weakness in property the last year has been the strength of exports. The downturn in property will be more obvious if that strength in exports isn't sustained.
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The China Diviner
Beijing is relying on infrastructure for growth. But with property in recession, exports slowing, and consumption dampened by Covid, the growth hole that needs to be filled feels too large. Without policies that support these other sectors, the current cyclical recovery seems unlikely to persist.
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China – Q2 GDP
June data improved, and in July the economic indicators will likely be stronger again. But it doesn't feel like the conditions are yet in place for a sustained recovery in economic momentum through 2H. Indeed, it feels like there is a rising risk that the recovery runs out of steam.
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China – June foreign trade
China's exports continue to show some resilience, but there's nothing to suggest a repeat of the 2020-01 boom that helped lifted the domestic economy out of the first covid shock.
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Korea - July BOK meeting
The BOK was yet more hawkish today, signalling controlling inflation, and specifically inflation expectations, remained the bank's top priority.
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Korea – June labour market
The June labour market release wasn't significant for the BOK. There was a pause in the rapid tightening of the last few months, but the unemployment rate remains very low, and employment high.
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Japan - June PPI
After a bit of a pause earlier in the quarter, import price inflation accelerated again in June, signalling a further rise in CPI.
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China – June monetary data
Credit data were strong in June, and big enough to help short-term market sentiment. But the details were weaker, with the rebound being driven by government bond issuance.
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Japan – May machinery orders
Machine orders softened in May, but not by enough to outweigh the improvement of the previous two months.
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China - taking stock
The economy is still recovering from the lockdowns of April and May, and that recovery likely still has some room to run. But it feels like downside risks are now growing again. This week's export and monetary data will be useful in evaluating just how large those risks are.
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Last week, next week
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Japan – May wages
The labour market is tightening. But while wage growth is accelerating, the pick-up is modest, and doesn't look sufficient to create a lot of upwards pressure on prices.
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Taiwan - June CPI
Headline inflation rose again in June to the highest since 2008. That was mainly food and goods prices. There are some signs of inflation broadening out, but for now, they remain tentative, and core is stable at around 2% YoY.
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Japan – Q2 consumer confidence
The BOJ's consumer survey provides granularity on the negative impact on spending of rising prices. However, the survey also shows overall confidence being mixed rather than outright negative, with two offsets being a tight labour market and rising incomes.