Public Post Region – modest rebound in import prices The rebound in import prices is obviously bigger in Korea where the currency has weakened more. Even there, though, the 7% rise is modest compared with the double-digit increases in 2021-22. And the YoY comparison will be dampened in the next few months by the rise in import price inflation in 1H24.
Public Post Japan – another firm Reuters Tankan After a dip in 2H24, the non-manufacturing survey is now back to cycle highs. One retailer was quoted as saying: "With high domestic consumer confidence, the number of customer visits....is growing steadily". That's interesting: official surveys don't show consumer confidence is that strong.
Public Post Korea – nasty employment data December employment fell sharply, and while that can be explained by the ending of some government jobs projects, it fits with the sharper downturn in the cycle in Q424. That will likely be the focus for the BOK tomorrow, despite other data today showing KRW weakness pushing up import prices.
Public Post Japan – EW suggests cycle still firm The recent up-tick in the monthly Economy Watchers survey persisted in December. The outlook is a bit weaker, but still comfortably above the survey's long-term average. While the cycle isn't booming, it does look solid.
Public Post China – strong exports, surging surplus China's exports rose strongly into year-end, while imports remained flat, sending the trade surplus surging. Maybe there's front-loading to beat Trump II tariffs, but it is notable how resilient China's exports have remained when the Trump I tariffs remain firmly in place.
Public Post China – even without tariffs, $CNY can get to 7.7 $CNY has started to move this year, but it isn't clear that the currency is yet pricing in tariffs. The sharp fall in onshore rates has further widened the spread with US yields, and that gap alone points to $CNY rising towards 7.7.
Public Post Japan – consumption still soft Data today show consumption still weak. But I don't think this is critical. Ueda recently was talking about better spending, which is clear in per capita terms. The aggregate is held down by the falling population, but that decline is also behind the increasingly clear trend of wage growth.
Public Post Taiwan – exports up, but imports stronger still The export cycle in Korea has hit a wall, but in Taiwan, there's still no slowdown. That's important, but the highlight of the December trade report was the strength of capital goods imports, which points to a strong domestic capex cycle.
Public Post Japan – part-time wage strength Base pay for full-time workers has plateaued at a bit below 3% since Q324. That loss of momentum isn't especially worrying: in 2023/24 there was a similar pause before real-acceleration. Part-time wage growth continues to trend up, reaching 4.7% YoY in November.
Public Post Region - Samsung v TSMC = Korea v Taiwan There are other things that explain Korea's economic underperformance relative to Taiwan since 2020, with consumption being one of them. But the stumbles at Samsung are still particularly important, happening while TSMC goes from strength to strength.
Public Post Japan – a hint of real reflation Given the relationship is far from perfect, it would be wrong to read too much into this first chart. However, it is still notable that the rebound in consumer confidence hasn't relapsed despite the continued strength of inflation expectations. That at least gives a hint of substantive change.
Public Post Japan – part-time wage inflation rising further While full-time worker pay clearly matters, it is also important to watch wage inflation for part-timers. That this is already running at 4% illustrates the real tightness in the labour market. There's more upside ahead, with reports that the big retailer Aeon is planning another 7% hike in 2025.
Public Post Taiwan – still likely on hold Headline inflation ticked up in December to back above 2%, but core continued to ease. With property cooling too, the likelihood of further monetary tightening is receding. At the same time, the strength of semi equities and the services PMI mean no urgency to cut either.
Public Post Taiwan – overseas production ratio lowest since 2008 Taiwan's export orders data today show another decline in the overseas production ratio, especially for electronics products. That implies some move in the supply-chain from China, which helps boost Taiwan's growth, but at the expense of more direct trade and a surging trade surplus with the US.
