Korean business confidence ticked up in the October survey, but isn't at a particularly strong level. It is easy to think that is because semi is growing while nothing else is, but in October, it was manufacturing sentiment that softened; sentiment in non-manufacturing, not a direct beneficiary of…
The release of trade volume data for September offer a reminder that imports in China are as weak as exports are strong (there is more on this theme here).
Profit growth ticked up in September, and although that wasn't enough to lift the three-month moving average, the strength of PPI indicates that the upcycle in YoY growth that began early this year isn't over yet.
The RCTED consumer confidence survey in October showed big falls in willingness to purchase durables and sentiment towards property. The drop in property sentiment completely reversed the sharp pickup in September, a rise that had looked like a reaction to the CBC's loosening of macro-pru measures…
Inflation data today were mixed. On the one hand, the BOJ's measures of CPI excluding "institutional" factors like government subsidies picked up sharply in September, a rise that leading indicators have been warning about for some months. On the other hand, core services PPI eased.
The second wave of upstream price inflation since the Iran War softened through the month of October. However, oil and chemicals prices have continued to rise, with the respite in the overall level of prices all because of coal.
Today's data don't suggest any of these labour market trends changed in September, with the unemployment rate remaining very low. Consistent with a tight labour market and strong wage growth, retail sales growth remained strong last month, and continues to outperform the rest of the region.
All the headline measures of CPI inflation rose back above 2% YoY in September. That isn't a surprise, and leading indicators point to more upside ahead. Japan is seeing some of the same cost-push inflation resulting from higher chip prices that has been evident elsewhere in the region.
At first glance, the BOJ's senior loan officer survey today suggests interest rate hikes might be starting to bite. But there is an important caveat: when rates have been zero for so long, it is difficult to benchmark what normal might be.
In general, consumption in China is weak, but that is especially true for autos. Given this, it is encouraging that weekly data car sales data so far through October show a lift.
Japan hasn't been hit as hard by China's auto export surge as Europe, at least in its own domestic market. Exports to China have fallen, but Japanese producers seem to be continuing to find markets elsewhere.
Today's more detailed GDP release showed a big rise in the contribution from net exports in Q3. That was surprising given monthly trade data hadn't been that strong. However, without that bounce, overall GDP in Q3 would have been weaker, given the data also show investment was soft.
The data flow isn't yet showing any dislocation in the cycle. Today's September export orders edged up in level terms to a new all-time high, and YoY growth remains over 60%. However, this series has tended to be more of a coincident than leading indicator for actual exports.
One aim in the current five-year plan is to raise the consumption share of GDP by a "notable" amount. On this, the government isn't getting off to a good start, with the consumption share this year falling back below 40% in Jan-Sep this year.
There has been a switch in business sentiment this year, improving sharply in manufacturing, and softening in services. That same handover is starting to be seen in hard data. Industrial production has jumped, while today's data for services show output growth easing back to below 2% YoY.
That China is exporting more capital goods – one element of the China Shock 2.0 – isn't so surprising. One reason is the sophistication of the economy that tends to be achieved when income per capita reaches the sort of levels seen in China today.
In terms of the domestic economy, the acceleration in USD import price inflation in September was offset by KRW appreciation, though that impact will fade in October.
MoM credit growth ticked up in September, but not by enough to cause an upturn in the impulse. However, the rise in government bond issuance did stop the overall impulse from worsening further. The big drag on lending continues to be households rather than corporates.
The equity sell-off in Korea obviously reflects nervousness about the sustainability of the AI cycle. But TSMC in its quarterly earnings presentation today didn't sound worried at all.
Today's data for August show a slowdown in money growth, particularly M1. That reflects the reversal in the stockmarket from June, a sell-off that has gathered pace again this week.
As with machine tool orders, overseas (largely tech) machine orders remain strong, a rise in demand that has boosted Japan's manufacturing cycle this year. BOJ board member Koeda spoke about the importance of AI-related demand in her speech today.
As with bank lending, YoY growth in money supply has slowed. However, while not as strong as lending growth, sequential growth in money supply has picked up in Q3. With the monetary base contracting, money multipliers continue to rise.
The monthly flow of tax revenue has become lumpy. That is because of the changes in filing dates that the government has rolled out in recent years to try to ameliorate the impact of the various economic shocks that have hit Taiwan.
When the Iran war started, the BOJ fretted about a negative terms of trade shock. The TOT did fall, but not much: while import prices rose, export prices did too. In September, boosted by chip prices, export price inflation rose again to a new all-time high.
Trade data make it clear why the EU wanted to control imports of hybrids from China: monthly shipments were under 15,000 units at the end of 2024, but have since surged to more than 70,000.
