East Asia Econ

East Asia Today

Today, top-down and bottom-up data in Korea show wage growth still slowing; the August S&P services PMI in China rose, but also reported continued pricing pressure; and the services PMI in Japan remained firm, which continues the narrative of a cycle led more by domestic than external developments.

Paul Cavey

Sep 3, 2025 • 2 min read

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East Asia Today

High-frequency price data continue to show deflation in China is as much about weak aggregate demand in construction as over-supply in manufacturing. Elsewhere, BOK BOP data show NPS buying continues to create capital outflows, offsetting the KRW impact of the structural CA surplus.

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Korea – NPS still a big overseas buyer

July BOP data show that KRW appreciation continues to be restrained by substantial buying of overseas assets by the NPS. But the tone of capital flows has started to change as foreigners buy onshore equities, and should shift more later this year with Korea's entry into the FTSE Russell's WGBI.

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Korea – wage growth still slowing, floor should be close

The breakdown of income in the detailed Q2 GDP data shows the labour share falling, but remaining well above the pre-covid level. That implies wage growth has slowed to a bit over 2%. Bottom-up wage data for June look similar. A floor is probably close, but there's no sign of a re-acceleration yet.