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Japan - May Tokyo CPI
There's probably a bit more upside in CPI from here, but data for Tokyo in May fit with the idea that inflation momentum is starting to ease.
Paul Cavey
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Japan – April services PPI
Headline services PPI accelerated sharply in April to 1.6% YoY, then highest since at least the 1990s. But that was mainly due to the surging cost of international freight services. Domestic services inflation is rising, but more modestly.
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Korea – May BOK meeting
The BOK was hawkish today. It raised rates; revised up its forecasts for inflation; and added to its statement a new phrase that the “Board sees it as warranted to conduct monetary policy with more emphasis on inflation for some time”.
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Korea – May business sentiment
At the margin, today's business sentiment data likely tilt the BOK to remain more hawkish for a bit longer. Korea isn't facing stagflation. Rather, as has been the case recently, growth is strong and inflation rising inflation. Given that backdrop, there's likely more tightening ahead.
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Korea – Q1 consumer credit
With the credit:GDP ratio remaining very high, the recent slowdown in the growth of household credit won't reduce the BOK's financial stability concerns.
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Korea – May consumer confidence
The strength of buying intentions and especially price expectations in this month's consumer confidence survey will keep the BOK hawkish at its Thursday meeting.
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Japan – April trimmed mean CPI
Trimmed mean CPI rose again in April to a record high, and there's probably still a bit more upside ahead. But for CPI to take another meaningful step higher, the domestic labour market likely needs to tighten further.
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Korea – May 20-day exports
Export growth looks to have moderated in the first 20 days of May. The surprise was that there wasn't more of a material weakening.
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China – where we're at
The Covid-19 situation has improved, but not by enough to declare the all-clear. Policy has eased, but not by enough to ensure recovery when lockdowns do end. There's more debate about giving help to households, but further loosening still seems likely to focus on companies and investment.
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Weekly summary
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China – May LPR
The 5-year Loan Prime Rate was cut 15pb today. That was bigger than market expectations, but property equities rose only modestly. That is likely a reflection of how weak activity currently is, and thus how much work still needs to be done to turn things around.
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Taiwan – April export orders
It has been clear for a while that the Asian export cycle has peaked and is moderating. The sharp fall in Taiwan export orders in April is the first sign that the slowdown is not becoming much sharper.
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Japan – April CPI
CPI rose in April, with the BOJ's preferred measure rising above 2% YoY for the first time in Governor Kuroda's tenure at the BOJ. The leads now suggest a peaking, which if right, would likely be positive for domestic economic momentum.
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Japan – April exports
Headline YoY export data in April were reasonably firm. But exports fell quite sharply MoM. Downside risk for the regional export cycle is increasing.
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Japan – March machine orders
Japan's machine orders bounced in March, but not by enough to change the overall picture. That continues to look like a continuation of the sluggish recovery in domestic capex of recent months, and export growth slowing to zero.
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Japan - Q1 GDP
Q1 GDP data show no change in Japan's sluggish recovery out of Covid-19. The leads suggest GDP bounces in the next 3M, which is believable, given the potential for better domestic services activity. At the same time, the downside risks for exports appear to growing.
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China – April property prices
As was seen with other indicators for the property market in April, the tentative recovery in housing prices of the last few months also lost momentum last month.
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The East Asia Economist
Neither the drop in Korean CPI before 2019, nor the demographic and deflationary experience of Japan, tells us anything definitive about the outlook for price trends in Korea. In fact, it is likely that the country's fiscal position allows Seoul to respond to ageing in a way that isn't deflationary.
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China – where we're at
Economic activity came to a halt in April, and given the government's priorities, can't restart until lockdowns end. The PBC has offered more policy support, but given the hole the economy is in, not enough yet.
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China – April activity
Chinese GDP is almost certainly contracting once again. The quality of the data makes it difficult to say how deep the fall is, but by my rough estimate, RGDP declined by perhaps 2-3% YoY in April.
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Weekly summary
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China - April credit
The credit data were weak in April. That's certainly in part due to the covid lockdowns, but it doesn't feel like there is enough policy support yet to ensure recovery if and when the virus situation improves.
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Japan – April EW survey
The Economy Watchers survey was solid in April, which suggests a constructive outlook for the cycle, with perhaps a touch of upside risk compared with the other advanced economies.
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Korea - April labour market
There's nothing in the labour market data for April to make the BOK less hawkish.
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China - April inflation
Food price inflation rose in April, pushing up overall CPI. But core remains subdued, and PPI inflation fell back.