Paid Members Public Korea - better in September At a headline level, export growth fell again in the first 20 days of September. The details were stronger, but that is likely noise, with more downside for exports ahead. Paid Members Public Korea – goods v services prices The labour market remains tight, making it difficult for the BOK to relax, even as import price inflation starts to recede. Paid Members Public Korea – August CPI Headline inflation slowed in August, but core remained strong. It is easy to assume the BOK remains hawkish in the short term. But with growth now slowing, pricing around the BOK into 2023 is starting to look more interesting. Paid Members Public Korea - August exports Exports fell in August at the sharpest rate since early 2020. The data are following our leading indicator, which points to exports falling 10% YoY in the next 3M. Paid Members Public Korea - August BOK decision The BOK remains hawkish, continuing to stress that containing inflation is its number one goal. It will probably be at least another couple of month before the growth picture starts to challenge this stance. Paid Members Public Korea – business sentiment The business sentiment survey shows activity remains reasonably firm, while inflation momentum is fading. At a minimum, the pace of BOK tightening should be slowing. Paid Members Public Korea – August consumer confidence The recent sharp rise in inflation expectations stalled in August. That takes some pressure off the BOK, but for the central bank to relax, services inflation and growth need to slow more. Paid Members Public Korea - July labour market Today's labour market report isn't of much consequence for the BOK. The pace of the recovery since 2021 has started to fade, but the labour market still remains very tight. Paid Members Public Korea – July foreign trade Korean July trade data were consistent with three themes for the regional export cycle: momentum is slowing; so far, it is a slowdown, not a recession; but leading indicators point to exports starting to contract before year-end. Paid Members Public Korea – July CPI Korean inflation is probably close to peaking as the rise in goods prices starts to decelerate. But services price inflation remains firm, and while that continues, there isn't much room for the central bank to be able to relax. Paid Members Public 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. Paid Members Public Korea – July consumer confidence While consumer confidence fell in July., the bigger story is the very sharp rise in inflation expectations. Paid Members Public 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. Paid Members Public Korea - July BOK meeting The BOK was yet more hawkish today, signalling controlling inflation, and specifically inflation expectations, remained the bank's top priority. Paid Members Public 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. Paid Members Public Korea - June CPI Korean inflation rose again in June. Worryingly for the BOK, while goods price inflation is softening a touch, domestic services inflation is still accelerating. Paid Members Public Korea - June exports and business confidence Activity in Korea continues to hold up reasonably well. There are some signs of inflation peaking, which might be important for the BOK, but not until later in the year at the earliest. Paid Members Public Korea – June consumer confidence Consumer confidence fell sharply in June, as inflation expectations surged. The BOK will be remaining hawkish for the time being. Paid Members Public Korea – June 20D trade The fall in exports in June might reverse in the next couple of months as China reopens after the covid lockdowns. But even if that occurs, it would likely be a temporary boost, with leading indicators for the next 6M all pointing down. Paid Members Public Korea – May employment The labour market release for May was strong, and will keep the BOK hawkish. Paid Members Public Korea – May CPI The BOK was right to be hawkish at its last meeting. There was a broad-based acceleration in inflation in May to the highest rate since mid-2008. Paid Members Public Korea – May exports While exports are still growing YoY, it is feeling more likely that they will soon be contracting. The main risk to that is any policy easing in China which causes the cycle there to accelerate strongly. Paid Members Public 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”. Paid Members Public 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. Paid Members Public 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.