Taiwan's stellar growth cycle doesn't show signs of ending. The government's monitoring index rose to 41 in June for only the fourth ever time, a level that is officially characterised as "booming".
Japan's core services PPI inflation fell back below 3% YoY in June. That actually looks to be more a reflection of goods prices than anything to do with services: inflation in service sectors with high labour content ticked up in June to 2.6% YoY.
Industrial production once again grew strongly in June. That, of course, isn't a new story, but there is now some strengthening of domestic demand too, with the recent upturn in retail sales continuing in June.
There is no sign of slack appearing in Taiwan's labour market data: the overall unemployment rate remains at 20 year lows, forced redundancies haven't risen, and employment continues to edge up.
Taiwan's export indicators have become more mixed in recent weeks. On the one hand, reported exports in both value and volume terms have softened. On the other, TSMC sales and commentary have been strong, and today's export orders for June continued to rise, led by semiconductors.
YoY growth in Korean exports in the first 20 days of July accelerated again to over 60% YoY. That was partly base effect, with the level of exports edging down. That softening was, however, only apparent in non-tech exports; the value of chip exports rose again, as did the trade surplus.
Today's detailed data for June show the huge impact that demand for AI infrastructure is having on China's trade data. Headline exports rose almost 30% YoY last month, but excluding AI hardware growth was less than half that.
Taiwan's export volumes dipped in June, and in Q2 as a whole were basically flat. Not being nearly as cyclical, Taiwan's semi export prices aren't rising nearly as quickly as in Korea, so the peaking of export volumes feeds into a peaking of export values.
There's no sign of any slowdown of capital inflows into China in today's fx settlement data for June. That helps explain the continued fall-off in PBC liquidity injections last month, which become less necessary when inflows boost money supply.
In terms of the data flow, yesterday's monthly Reuters Tankan survey provided more evidence of the turn for the better in manufacturing. Today's senior loan officer survey showed a decline in loan demand by companies.
Today's release of detailed GDP data for Q2 showed the biggest contribution to growth came from consumption (1.9ppts), followed by investment (1.5ppts). That will be puzzling to many when retail sales in the quarter fell a bit, and fixed asset investment fell a lot.
TSMC today reported Q2 earnings. In doing so, the company again raised its forecast for revenue growth in 2026, this time from "above 30%" to"slightly over 40%".
Confidence in the BOJ's quarterly consumer survey, remained poor, with resilient expectations about income and employment offset by continued concerns about high prices. At the same time, expectations for further inflation strengthened again.
The extent of the positive terms of trade shock was visible in today's data for export and import prices for June. Import price inflation eased, but export prices rose almost 50% YoY. The improvement in the terms of trade of Q1 accelerated in Q2.
Momentum in Japan's economy is the best it has been in several quarters. Today's data for May showed services output strong once again. Goods output has also picked up this year, and the separate release today of machine orders data for May indicate the stronger growth sustaining.
The softening of upstream prices through June continued in early July. The decline has been centered on energy and chemicals prices, but metals prices – which led the stabilisation of PPI from mid-2025 – have also softened.
In level terms, headline USD exports in recent months, while remaining high, have started to look peaky. However, the slowdown hasn't yet appeared in volume data, and TSMC's sales for June that were released yesterday suggest the upcycle for export values may not be completely over either.
The May wage data were released Frifay, but by the evening the government's database still hadn't been updated. It has now, and the numbers show the gradual pick-up in wage growth is continuing. That is led by manufacturing at 3% annualised, but since 2023 services growth has also picked up to 2.7%.
10D trade data tend to be noisy, and true to form, the message from today's release for the first third of July differs depending on which way the numbers are cut: headline YoY growth in exports slowed; the YoY change in workday-adjusted exports accelerated to 60%; and in level terms workday…
Perhaps because offices in Taipei have been closed today due to a typhoon, the government's database hasn't yet been updated with today's wage data for May. The headlines suggest underlying wage growth is now near 3%, with momentum in both manufacturing and services picking up since 2024.
Today's corporate price data from the BOJ show the terms of trade falling. However, the decline in recent months is more similar to 2016-18 than 2021-22.
The surge in Taiwan's exports has finally started to lose momentum over the last few months. Some of that, however, is because of prices: volume data (through May) has remained strong.
Fiscal policy is one mechanism by which the big increase in national income produced by the semiconductor boom can lift the wider economy. Data today show that tax revenues rose more than 17% YoY in the first five months of this year. According to today's press release (machine translated):
Recent data releases have pointed to a strengthening of both the cycle and inflation in the next few months. Today's sakura regional report from the BOJ sends the same message.
The Economy Watchers survey improved in June, but the recovery was less than seen in other recent surveys. That was a surprise, and I'd expect more improvement in July. Cycle strength did continue to be seen in bank lending in June, which continued to rise.
