Both import price and PPI inflation eased in July. That makes sense given the fall-back in global prices, and there should a further softening through the remainder of Q3. However, in absolute terms import prices remain high, which will likely limit how far PPI inflation can drop.
For Korea's labour market, some of the themes of the last few years continue to play out: unemployment is low, with employment being driven by government and public services, and older workers.
From late last year, there were signs of a recovery in the manufacturing cycle. That process was set back by the outbreak of the Iran war, but now seems on track again, with manufacturing sentiment in today's August Reuters Tankan rising.
Tax proceeds have become volatile in recent years, the result of the government temporarily shifting filing dates to give firms and households some protection from economic shocks. The latest example was last year's filing date being pushed to July because of tariffs.
Korean exports in the first 10 days of August ticked down. That was true in both YoY and level terms, and for semiconductors and other products. For chips, that is the first decline since November. However, it would be premature yet to conclude that this marks a turning point.
Annualised regular wage growth in both manufacturing and services has been above 3% since 2024. In Q2 in manufacturing, it has been near 4%. The risk remains that the export cycle now slows, but TSMC's strong sales and elevated manufacturing overtime don't suggest that is happening yet.
China's exports dipped in July. Few details are included in this first release of the monthly data, but what was made available today shows a mild slowdown in shipments of both autos and semiconductors. Imports, meanwhile, edged up, but not by enough to make any big difference to the trade surplus.
Taiwan's exports softened in July, and now haven't increased since March. It would obviously be important if the absolute peak in shipments has now been seen, but I am not convinced yet.
The BOJ's monthly private consumption proxy showed a sharp decline in June. The main reason was a reversal of the bump in durables purchases that had been caused by new regulations around household AC units.
This year's vertical rise in the current account surplus continued in June. It is now over $40bn, equivalent to 25% of GDP. That's huge in absolute terms, but also relative to history: before this year, the surplus as a ratio of GDP had never risen above 10%.
Trends in global commodity prices have been a better lead for PPI in China than domestic series for upstream prices. Nonetheless, the local data are worth watching. Yesterday's release covering the end of July shows a rebound into the close of the month.
Taiwan's fx reserves fell in July for a second consecutive month. That is quite a contrast with the huge trade surplus. That the currency nonetheless remains stable almost smack in the middle of the range of the last 30 years is because of strong overseas investments by other sectors, particularly…
After three consecutive months of withdrawals between April and May, the PBC started to inject liquidity in June, and continued to do so in July. That is happening even though fx inflows have remained strong, so at the margin probably shows the central bank is becoming concerned about the strength…
The property market has bottomed after the hit from the CBC's macro-prudential measures in 2020-24, but still isn't showing a lot of life. That's true for transactions, prices and mortgage lending.
The contraction in the monetary base continues to accelerate, reaching almost 14% YoY in July. That leaves the monetary base almost 40ppts smaller relative to GDP than it was at the peak in 2022. At 82% of GDP, the monetary base is, however, still very large.
China's S&P/RatingDog PMI fell in July to the weakest level since January. The survey did note an increase in inventories, but overall, it continues to paint a brighter picture of the cycle than that indicated by the official version.
The manufacturing PMIs were more or less unchanged in July. Both suggest that the manufacturing cycle remains strong, though since 2024 actual IP growth has been much higher than either survey would have suggested. The official non-manufacturing PMI dipped in July, but at 57.3, is still high.
YoY export growth slowed in July, but was still more than 60%. Moreover, the value of exports continued to rise in level terms, and while the star of the show remains semiconductors, this year's lift in non-tech exports continued in July.
Taiwan's Q2 GDP release had two main features. First, growth remains strong. The rate of expansion slowed to 12.9% YoY, but that was above both market expectations and the government's most recent forecast for the quarter of 10.8%.
The recent improvement in exports sustained in today's data for the first 10 days of July. However, that isn't necessarily because of volumes, with values being boosted by higher chip prices.
Both import and export volumes ticked up in June, but the change wasn't big. For imports, that means the hopes for a revival that were triggered by the surprising strength in volumes in Q1 have come to nothing.
Tech hardware profits in China are surging, and for the first time, tech is earning more than metals, the sector that was the big winner of the pre-2020 property-led cycles.
Korea consumer sentiment ticked up again in July, and remains comfortably over the long-term average for the series. That sentiment was resilient since June is interesting given the weakening of the equity market, though even in that context, today's sell-off was particularly brutal.
The BOJ today released its measures of underlying inflation. After adjusting for government subsidies, its preferred measure of core (excluding fresh food) rose 2.7% YoY in June, meaning it has been at or above its target of 2% in all but three of the last 53 months.
In level terms, industrial profits in China continue to go sideways, albeit in a wide range, and with variation by sectors. Helped by the rise in global oil prices, the end of Q1 saw the first recovery in heavy industry profits since the property market collapsed in 2021.
