The sharp swing in the auto trade balance between Germany and China is continuing, but Germany doesn't seem to be losing out as much as the US and Japan from China's controls on exports of rare earth magnets.
The unemployment rate remains pinned at 25 year lows, and if anything, continues to edge down. Employment isn't changing much, but unlike Korea and Japan, nor is the participation rate. There also aren't yet clear signs that the cycle is slowing down.
After going sideways for the previous four years, imports have suddenly risen in 2026. Much of this, however, is due to the AI tech trade. That is related to global rather than domestic demand, and is about prices more than volumes.
The AI-tech trade didn't end in August. Korean data for the first 20 days of September show that semiconductor exports have this month continued to rise sharply. That in turn has pushed overall export growth above 80% YoY, and likely means the trade surplus last month rose yet again.
The second release of China's trade data for August show the fallback in auto exports was because of EVs. But that comes after a particularly strong July, so is likely noise rather than a change in trend.
PPI inflation ticked up in August, for both goods and services. The increase in goods would have been more but for the appreciation of the KRW. However, even with the stronger currency, the rise in world oil prices through 1H September points to a further increase in upstream price pressures in…
As expected by everyone (probably), the BOJ hiked today. The statement acknowledged the recent improvement in manufacturing momentum, as well as the acceleration in inflation that was seen in today's national CPI data.
Korea's 2027 budget includes projections for a consolidated fiscal surplus of 1.6% of GDP. If that is what is achieved, it will be the first time that the balance hasn't been in the red since 2018.
Yesterday's settlement data for August suggest another month of big capital inflows. Leaning against CNY appreciation I think suits the PBC: it doesn't want a big rise in the currency, while capital inflows help with monetary reflation.
August data today from Sinyi, a real estate agent, show a continuation of the renewed upturn in property prices that began earlier this year. The monthly data only cover northern Taiwan. Quarterly data that have broader geographical coverage will be released next month.
Taiwan's monthly FDI data are lumpy, but the upturn of recent years is continuing, a trend that can be seen a bit more clearly in the quarterly balance of payments release from the central bank.
Export prices continued to rise in August, and with import price inflation decelerating, the terms of trade rose again. That signals another jump in real incomes in Q3, and a further acceleration in nominal GDP growth towards 30%.
The focus of discussion around the BOJ has been inflation, and what is happening to price trends is of course important. But for me, the shift this year in growth dynamics also matters. Today's July data show that services output continues to grow at a relatively rapid rate.
China's credit impulse continued to decline in August, but within that, there are three different sector dynamics: the drop in household lending that started in 2021 is continuing, the weakness in CGB issuance since 2025 has yet to reverse, but "other" (mainly corporate) lending is stable.
Regular wage growth was strong enough in July to lift the long-run average another step closer to 3% YoY. The renewed strength of exports in August and the rise in IP point to manufacturing continuing to be the leading sector, and consistent with that, overtime hours worked in the sector continues…
I'd thought that the rise in inflation of 1H26 was all over, but now I am not so sure. Industrial prices rebounded through August. The rise is led by energy (oil, and also coal), but is quite broad-based, with metals and even building materials prices also ticking up.
The PBC used its operational tools to withdraw liquidity in March-May, but in every month since then the central bank has once again been injecting liquidity. These changes don't seem to suggest much about monetary policy.
Taiwan's fx reserves rose USD7.6bn in August 2026. That is the largest rise since the big increases around the time of the mini-TWD shock of May last year.
After the sharp fall in July, the S&P/RatingDog services PMI ticked up in August to leave it more in line with the weakness shown by the official version. The press release seemed to want to highlight summary bullet points that were upbeat in tone.
In terms of sectors, the strength in Japan's cycle this year has been concentrated in manufacturing. However, after falling with the onset of the Iran war, services momentum has recovered, and while still off the highs, does suggest that activity is solid.
In today's data, fiscal revenue in August was perhaps a little weaker, but the trend rise of recent years remains intact. With the BOJ continuing with QT – a dynamic that is also relevant for Japan's fiscal position – the sharp contraction in the monetary base is continuing.
It July it looked like the gap between the official and S&P/RatingDog PMIs was closing. But in August, it widened again, with the RatingDog manufacturing PMI rising to 51.5. That is far from a boom, but isn't particularly weak either.
Taiwan's official manufacturing PMI rose further in August, and is now comfortably above 60. With the TWD not following the KRW stronger, input price pressures in Taiwan also ticked up again in August. The non-manufacturing PMI did soften last month.
Korean exports remained strong in August, with little sign of a slowdown in semiconductor shipments. As a result, the trade surplus rose further to over 20% of GDP.
Overall, the cycle continues to look stronger this year. I'd thought more of the weakness of retail sales in June was payback from the regulatory changes that earlier in Q2 had produced a bounce in sales of household AC units.
