East Asia Econ

Today's PBC action to drain liquidity for the second consecutive month via the MLF follows a big run-up in 2H23. Still, it does show that the bank remains a cautious easer.

The BOJ uses machine orders as a lead for machinery investment. Data show Feb was stronger, but not by enough to lift the 3mma by much.

Wage growth did slow in 2023, but that looks cyclical, not breaking the higher rate of trend growth that's been apparent since the pandemic.

We can be increasingly confident that mortgage lending has bottomed out. But there aren't any signs of a rebound.

Exports rose MoM in March, while imports were weak. Outside concern about China's trade surplus is going to intensify.

Today's Q1 BOJ consumer survey shows sentiment about income rising to the highest level in 20 years.

Demographics are really having a big impact on the composition of employment.

Data today show Korea employment did tick down in March, but the unemployment rate remaining below 3%, the lowest since the 1990s.

China should be close to an inflection in PPI, but the turn didn't happen in March. PPI fell 2.8% YoY, a rate of deflation that hasn't changed much since August 2023.

The pick-up in core CPI from late 2023 hasn't persisted, dropping back to +0.7% in March. That is consistent with the post-covid performance, and a step down from the pre-2020 average of nearly 2%.

Data for the first 10 days of April don't show an acceleration of the mild export recovery of the last few months. That matters for the BOK when domestic demand is also weak.

YoY export growth did accelerate in March to almost 20%, the highest since early 2022. But in level terms, the recovery remains rather sluggish.

If there was supposed to be goods price disinflation in Japan, it didn't last long, and didn't make much difference to the level of either import or producer prices.

Even after a deep and long export recession, services inflation in Taiwan is still running at the highest rate since the late 1990s.

Data today show core CPI inflation accelerated to an annualised 3% in March. No wonder the central bank raised rates last month.

The EW survey in March fell MoM, but remains well above the long-term average, and continues to point to better GDP growth.

As in China, consumption has been the big macro drag in Japan. That should change in 2024, but BOJ data through February show no turnaround yet.

With a weak cycle, policy is being loosened. But given China's obvious industrial strengths, it is still striking how much the CNY has weakened.

Japan's negative output gap has finally closed! But that has taken 14 quarters, and even now, the BOJ calculates the positive output gap is just 0.02%.

At 52.7 in March, the S&P Global services PMI for China is firm, above the post-2012 series average. The write-up feels better still, reporting firms being "enthused".

Quick Take chart. Japan's services PMI shows re-acceleration, with firms reporting a "sustained rise" in jobs and inflationary pressures remaining 'marked'

Quick Take Chart. PBC lending to the financial sector via the PSL facility fell in March. The decline was small, and might be temporary. But at the least, the PBC isn't doubling down.

Quick Take Chart. Details of the BOJ's Tankan don't show a lessening of inflation. Rather, price pressures are warming up in non-manufacturing, and re-accelerating in manufacturing.

Lower energy subsidies will push up headline inflation in Japan in the coming months. More interesting is that output prices in the BOJ's Tankan survey point to underlying inflation also heading higher.

Headline inflation ticked up in March, but underlying measures slowed. Prices are still rising by over the BOK's 2% target, but the trend slowdown will allow the central bank to give more attention to the weak economy.