With October meeting minutes, export and labour market data, there's enough to review the outlook for Korea. I think the underlying economic picture remains consistent with more cuts. But the minutes show Board members continuing to prioritise concerns about KRW weakness and house price strength.
Some strong numbers in Japan today, both the Economy Watchers survey – which provides a good guide to the direction of the cycle – and the current account surplus, which in September was the highest in at least 25 years. Also today, Korean export data for the first ten days of November.
The sharp recovery in sentiment in the EW survey continued in October. The improvement is broad-based, affecting both corporates and households. That shows a lessening of the tariff and inflation shocks of 1H25, and should be reflected in the BOJ becoming more optimistic about the outlook.
In addition to yesterday's inflation data from China (stronger at the margin), today's update includes the summary of opinions from the BOJ's October meeting, September consumption data for Japan, and September wages for Taiwan.
The summary of the October BOJ meeting show a stronger consensus that the time is approaching for another rate hike. That is partly because concern about tariffs is fading. It is less about domestic demand: data today show consumption trending up, but still only very slowly.
Data last week showed Taiwan remaining as one of the world's major beneficiaries of AI adoption. A big question for 2026 is whether Korea joins the party. Other themes are fiscal uncertainty in Japan, and further signs of stabilisation in China's underlying cycle.
CPI and PPI data for October show another lessening of deflation, and leads point to that trend being sustained through year-end. That is important, and fits with my idea of a bottoming for the underlying cycle. But I am not convinced yet, with services CPI inflation still too low.
Today's trade data for October were interesting, being stronger in Taiwan, but weaker in China. Taiwan's trade surplus surged again, but despite the narrowing in China, fx reserves rose in October. Also today, a note delving into an under-explored aspect of China's FAI data.
I am running out of superlatives to describe Taiwan's export story in 2025. So I'll let the numbers speak for themselves: today's October data show semi exports have grown 70% this year, pushing the overall trade surplus last month to 30% of GDP, and the bilateral surplus with the US to 20% of GDP
Many explanations have been put forward for the drop in YoY FAI. I have another: YoY catching up with the weakness already clear in the MoM. That's tongue-in-cheek, but looking at the under-used MoM series for IP, retail sales and FAI add useful perspectives on what is happening in the economy.
China's exports, which had been so strong, were weaker in October. That could be the lagged impact of tariffs. The suddenness of the change suggests other factors are involved, but we'll find out more with next week's detailed data. For now, it is worth noting that auto exports continue to rise.
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.