The BOK leadership will be concentrating today on the bloodbath in equities and particularly the KRW rather than statistics. But the dataflow is consistent with their cautiousness last week. All-economy output in January remained below the Q3 peak.
Today's consumer confidence survey shows again that, at least before the Iran war, the economy was on an upswing. Helped by the fall in inflation and optimism following the election, consumer confidence finally regained levels seen before the tax hike of 2019.
Today's manufacturing PMI wasn't quite as strong as yesterday's for Taiwan and Japan, with the commentary again highlighting the two-tiered picture for growth:
Given that Taiwan's PMI didn't capture last year's semiconductor-led boom, the recent rebound hints that the manufacturing cycle is broadening as well as accelerating. That said, semi remains the star of the show, as shown by the weekend's export data from Korea.
Japan's export data for the first 10 days of February were quite strong. That wasn't apparent in YoY terms, which softened However, in level terms, exports rose again, continuing the uptrend of January.
Taiwan's unemployment rate rose modestly in January, but remains close to the lowest level in 20 years. Involuntary unemployment is also very low. Employment is (slowly) rising, enabled by a participation rate that since March last year has inflected higher.
Today's other data release in Korea showed net foreign assets dipped in Q425. I need to do some digging to understand why. However, it doesn't change the structural theme, which is Korea's shift from being net foreign debtor to creditor.
Services PPI inflation eased to 2.6% YoY in January, the lowest since early 2024. That is mainly driven by prices in sectors with low labour intensity. However, inflation in high labour intensity sectors has also slowed, and the BOJ will likely be concerned if that doesn't reverse soon.
Today's detailed volume export data for Japan once again show that the rise in exports in January was largely related to Chinese New Year. The big spike in shipments to China will fall back in February.
All trade data for the first couple of months are suspect, distorted by the changing timing of the Lunar New Year holiday. In Korea, that cut the number of working days before the 20th from 15.5 in 2025 to just 13 this year.
December machine orders were strong, and while the series is notoriously volatile, there has been a clear uptrend since early 2024. The most recent jump in external orders started in July, so might be reflecting a lessening of trade uncertainty vis-à-vis the US.
With last year's remarkable acceleration in growth, Taiwan's RGDP over the last five years expanded more quickly than China's. As impressive as that it, in a way it understates just how fast Taiwan has been growing.
Service activity in Japan dipped in December, but I wouldn't be particularly concerned that the strong post-pandemic growth is about to end. Business surveys continue to show sentiment in the non-manufacturing sector remaining strong.
High-frequency data through the first 10 days of February show upstream prices remaining flat. That's been the case for almost seven months now, and suggests that the lessening of YoY PPI deflation is continuing. However, that overall picture masks variation by product.
That regional recovery in the terms of trade is visible in today's full Q4 GDP release for Taiwan. The terms of trade are now making the biggest contribution to real incomes since 2005. That is at a time when GDP is already rising quickly, a trend that the government now expects to continue.
Import and export price trends look very much like those for Japan:
The PBC's quarterly monetary policy report includes data on actual interest rates banks are charging their clients. This week's Q425 report showed the fall in mortgage rates that began in 2021 coming to an end 2025, with rates remaining at 3.1% all year.
Data last week showed headline CPI dipped in January back towards the BOK's 2% target. High-frequency data so far through February point to that lessening of headline inflation continuing.
Wage growth has been slowing in Korea, both cyclically and structurally. The reverse is true in Taiwan, where data today show earnings growing by 3.1% YoY in 2025, the fastest in 25 years.
Overall employment ticked down in January, and has now been range bound since April 2025. That sluggishness is particularly apparent in the private sector, where the number of jobs remains 1.4% below the peak of early 2024.
TSMC's January sales rose 37% YoY and almost 20% MoM. As with yesterday's export data, it would be wrong to read too much into these numbers because of distortions caused by Chinese New Year.
Taiwan's official data show exports edged up to another record high in January. In theory, the government's data should account for the changing timing of the Chinese New Year, but I wouldn't be fully confident that they do, and so would wait until at least the February data before reaching…
Exports in the first 20 days of January perked up. The boost probably reflects the Lunar New Year impact, but still, the underlying story is that exports have yet to be disrupted by tariffs. That is also the message of this week's stronger manufacturing PMI for January.
After the sharp rise in the TWD in the middle of last year, fx reserve accumulation has moderated, and January didn't break that pattern. As the currency has reversed weaker, so the drop in import prices has moderated. Even so, headline and core CPI inflation dropped to just 0.7% YoY in January.
Weekly flow data hint at a lessening of net outflows. That's because equity inflows from foreigners remain strong, while since Q125, the pace of overseas bond acquisition by Japanese buyers has eased.
