Today's data releases included Japan wages (messy, but some interesting details), Korea's current account surplus (big, but not helping the KRW), and Taiwan inflation (low compared with ROW, high compared with history). Also, a link to a slide pack summarising my views for the region.
Data today show Korea's current account surplus remaining at over 5% of GDP. The fundamental driver is a fall in borrowing by the corporate sector. This structural surplus hasn't started to support the KRW. One reasons is continued outflows from the NPS.
Wage growth was softer in September. The continued slowdown in part-time wages per hour will be a bigger concern if it persists beyond the October rise in the minimum wage. Per hour full-time wage growth is stronger than the headline, though the data are noisy.
A slide pack summarising my views on the region, and each economy.
The S&P services PMI for China remained better than the official version, while PBC's liquidity injections eased off in October. In Taiwan, fx reserves fell last month. That is consistent with the weakening of the currency, but contrasts with this year's remarkable growth in exports.
High-frequency data for China through end-October show the stability in upstream prices has persisted. The implication is PPI deflation isn't worsening. In Korea, October CPI inflation ticked up. That's probably temporary, but inflation has remained stickier than I'd expected.
The rise in inflation in October has partly due to demand related to last month's extended holiday, and so shouldn't persist. However, inflation remains much stickier than I would have expected, given the ongoing weakness in the economy.
China's S&P PMI softened in October, though still paints a better picture of the industrial sector than suggested by the official survey. Korea's PMI also weakened, and neither that nor the BOK's sentiment survey point to a big coming lift in exports.
In what was a very eventful few days, two developments last week stood out for me: the cuts in US tariffs on China, and the call in the FYP plan for more consumption. Both continue the turn for the better in China sentiment. The upturn in Korea isn't yet supported by a stronger labour market.
Lots of data today, with the usual month-end releases for China, Japan and Korea. Also interesting were the analytical boxes in the BOJ's outlook report. Finally, an update on tariffs after yesterday's China-US talks. The conclusion: with the CNY depreciating, China doesn't look very disadvantaged.
Today there were the usual month-end data releases of retail sales, the labour market, and construction, as well as Tokyo October CPI. More interesting was the BOJ's full outlook report, analysing exports, capex resilience, food prices and consumption, as well as wages and prices.
With the official manufacturing PMI dropping to a two-year low in October, it is clear China's cycle continues to struggle. The offset is the improvement in the S&P/RatingDog versions (at least through September), and the better CKGSB survey this month.
Aside from Trump-Xi, the big event today was the BOJ meeting, though that was much more about continuity than change. In terms of data, Japan released trade data for the first 10 days of October. Korea's JOLTS data for September were weaker than the earlier labour market data had suggested likely.
Lots of sentiment surveys to discuss today: business confidence in Korea (better), consumer confidence in Japan (also better, even though inflation expectations remain high) and Q3 economy-wide surveys for China. Also, some details of China's 15th FYP, with some encouraging language on consumption.
The PBC's quarterly surveys cover firms and banks too, but I think the household version is most interesting. In Q3, household sentiment is weak, but mixed. Price expectations are very soft. Some of the savings data support the idea that China's economy is near a structural turning point.
After last month's puzzling fall, business sentiment bounced in October. With the diffusion across sectors still rising, it seems reasonable to expect a further rise in sentiment towards neutral. But there still are headwinds to recovery: construction and real estate, exports, and the labour market.
Today's focus is Korea, with consumer confidence and GDP, and yesterday's loan officer survey. Elsewhere, the BOJ has published its own cuts of trade and CPI data. That includes "underlying inflation", though these days the bank itself seems to believe reality is more complicated.
With yesterday's loan officer survey, and today's release of consumer confidence and GDP, there is lots to dig into. There are some important takeaways, but overall, the releases don't provide clarity on the two big issues facing the economy: house prices, and the outlook for growth.
The headlines are dominated by Trump's Asia trip. But there's also been lots of data released: industrial profits in China, services PPI in Japan, and consumer confidence in Taiwan. Export price data for China have also appeared, and echo the stability seen in the data for the rest of the region.
The steady drop in services PPI inflation stabilised in September, with core ticking up to 2.9% YoY. The data aren't good enough to prove the decline is now over, but I do think a floor should be close. Lumpiness in the data suggests a short-term bounce, and the labour market remains tight.
China has now released trade price and volume data for September. They show export volumes holding up despite tariffs, and that isn't because of price cuts. The recent mild upturn in import demand has also sustained. That calls into question the sharp fall in last week's FAI data.
Trump's visit will dominate the news this week, particularly his trade talks with China and Korea, and whether he says anything about the JPY in Japan. It now doesn't look like the BOJ will hike on Thursday, but the tone should be more positive. The data highlight will be Korean business confidence.
Japan CPI data showed headline near 3% and rising (inflation!), but core near 1% and falling (deflation!). Price data in China, by contrast, are stable, which is at odds with weak FAI. Finally, my updated trade mapper dashboard, which now covers autos and the battery and rare earth supply chains.
National inflation data for September was messy again. One reason was public service prices falling, a development that stands out when a theme of recent BOJ speeches has been pent-up inflation pressure in the public sector. Overall, the inflation picture still looks solid.
China's detailed monetary data for September are important, showing three positive trends. Elsewhere, the BOK didn't change policy, with just hints of becoming more positive. In Taiwan, IP and retail sales data for September continue to show the desynchronisation of the export and domestic cycles.