At first glance, Japan's March wage data were robust, with headline base wage growth remaining close to the multi-decade high of 3.8% YoY reached in February. However, the details were softer, with the constant sample data showing softer growth, and overall earnings in real terms dipping.
The sharp rise in upstream prices that began in February has eased back since mid-April. The reason is a decline in oil and chemicals prices. However, non-ferrous prices remain near the highs, and steel prices look to have bottomed.
Unsurprisingly, Taiwan's April data show import prices rising sharply. However, with export prices also increasing there was no deterioration in the terms of trade. Domestically, headline CPI inflation ticked up last month, but only to 1.7% YoY. Core also remains a bit below 2%.
There are many reasons to think that policy settings in Japan in general are too loose. But in quantitive terms, some tightening is happening. The monetary base did tick up in April, but that leaves it falling at a decent double-digit rate.
The only data release today for China was the S&P/RatingDog services PMI. That continues to suggest the services sector is doing way better than indicated by the official version. I still don't have a good explanation for the gap.
After falling in March, fx reserves bounced in April. That fits with last month's strengthening of the currency. However, these days, moves in fx reserves are tiny in compared with the size of Taiwan's massive external surplus.
Both of Taiwan's manufacturing PMIs ticked up in April. The rise took the official version to a new post-2021 high. That's impressive for an economy that has already been growing at 8%, but like Korea, the headlines are being boosted by supply difficulties, with a marked lengthening of delivery…
Today's PMI was much stronger than last week's business confidence survey from the BOK. This reflects two things. First, the PMI exaggerates underlying demand, with the headline being lifted in part by "efforts by clients to build safety stocks amid rising prices and shipping delays".
The sharp rise in upstream prices of previous weeks faded through the middle of April as oil and chemicals prices softened. That is probably temporary, and headline PPI inflation is still on track to edge up further in April.
National CPI inflation didn't change much in March. That, however, is because energy subsidies are hiding the direct impact of higher energy prices. There were hints of the indirect impact of the Middle East crisis, with core goods price inflation ticking up.
Services PPI inflation ticked up in March. That is mainly oil and import-price related, though it is reassuring that inflation in high labour-intensive sectors is also back above 2%. With goods PPI rising too, pipeline pressure for downstream inflation is starting to rise once again.
I missed the March export orders data earlier in the week, but what they indicate is worth highlighting: there is still no slowdown. Today's industrial production data for last month say the same thing: IP rose 4% MoM in March, and is up almost 30% over the last year.
Japan's April flash manufacturing PMI rose sharply from 51.6 to 54.9. S&P today attributed the rise in part to some firms raising production "due to concerns over future supply shortages due to the war in the Middle East".
After the jump in February, it wasn't surprising that exports softened in March. But the level of shipments remains elevated. Export values are getting a boost from the same semiconductor cycle that is lifting the rest of Asia, and that is helping compensate for the flat-lining of auto sales.
So far through April, Korean exports have continued to grow at over 40% YoY. The driver remains semiconductors, with shipments of other products weakening this month. It is this slowdown in exports outside of chips that weighed on the trade surplus.
The BOJ's quarterly loan officer survey doesn't point to any big change in financing conditions. Credit standards remain stable. Household demand for loans ticked up this quarter, led by housing loans.
The distortions from Chinese New Year often continue to affect China's trade data through March. This year there are two further complications: first, the surge in semiconductor prices, which is boosting both exports and imports; and second, the Iran War, which resulted in a big fall in China's…
One of the stand-out features of this cycle has been the strength of tertiary activity. That is true relative to growth in services before 2020, and the rate of expansion of manufacturing that has been seen since.
China today's release of the more detailed Q1 GDP data show a fall in the net export contribution in Q1. That was offset by stronger investment, while consumption was stable. There was a bounce in the FAI data in Q1, but construction fell even more sharply.
Despite the Iran war, TSMC's management today sounded even more bullish than they did three months ago. While last quarter, chairman and CEO CC Wei talked about revenue growth in 2026 of "close to 30%", today he forecast "above 30%".
Today's fx settlement data show inflow pressure lessened in March. But despite the war, it didn't disappear entirely, and the strengthening of the CNY in April indicates that net capital inflows are continuing.
Regular wage growth slowed in February, but the series is volatile, and I'd be doubtful there is yet any change in the trend acceleration of recent years.
There are two very distinct trends in Japan activity. The hard data flow shows the manufacturing cycle in the weeks leading up to the Iran War was gaining momentum, with the latest example being today's machine orders for February.
Other data released today for upstream prices for the first 10 days of April show that the rise in PPI seen through March has continued. The big drivers are the 40% increases in prices of oil and gas, and chemicals. For now, that is being offset by stable coal prices.
In China, central bank liquidity injections are quite generous, but the feedthrough into the wider economy is more modest. In Japan, by contrast, the monetary data for July show a further fall in the monetary base as the BOJ tapers JGBs purchases while also facing redemptions.
