East Asia Econ

East Asia Today

As usual, the first day of the month is busy for data, with PMIs across the region, and also Korean export data for August, and Q2 corporate profits in Japan. The picture painted is a regional manufacturing cycle that remains soft, but hasn't been delivered a new blow by tariffs.

Paul Cavey

Sep 1, 2025 • 3 min read

Public Post

China – will deflation end?

My latest video discussing the inflation outlook. Apart from the anti-involution drive, the stabilisation of demand deposits and property do ease the downwards pressure on prices. But the weakness of aggregate demand remains, and as yesterday's PMI suggested, the outlook for prices remains subdued.

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Korea – exports ok, PMI weak

Full-month exports in August were firm, but that still leaves growth in single digits, and neither data nor commentary from the business sentiment surveys suggest that is about to change. Indeed, today's August PMI remained well below 50, and reported a "sharp decrease in incoming business inflows".

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Japan – labour share rebounds

The Q2 rise in the labour share promises support for consumption, but without yet depressing profits. Manufacturing earnings did drop in Q2, and that questions the sustainability of capex. But IT investment was also strong, and the PMI suggests that overall, manufacturing is coping with tariffs.