The sharp reversal in exports expected by the government isn't showing up yet. Shipments rose strongly again in May, and are now 17% higher than in December. With imports weaker last month, the trade surplus increased to near 20% of GDP, a new multi-decade high. The biggest driver remains the US.

Sentiment in the Economy Watchers survey still points to slower GDP growth in 2H25. However, it now isn't particularly weak, improving in May back to the long-term average of the survey. That's probably not enough for the BOJ, but likely would be if Japan can now land a trade deal with the US.

In the second release of Q1 GDP, consumption was revised higher. In aggregate terms, there's still no convincing trend up, but the per capita level of spending is now as high as the previous record peak in 2014. The revision boosted GDP to flat QoQ, even though capex was revised down.

Consumer sentiment has been sliding, but in April, the BOJ's measure of consumption was firm. It is still well below the pre-covid level, but the numbers look consistent with the BOJ's view that consumption is on a "moderate increasing trend".

The S&P PMIs indicate slower growth in May, with the mfg PMI dropping sharply, and today's services PMI sluggish. Both also suggest more deflation. In today's survey, input prices ticked up, but selling prices were pushed down by "greater competition for new work and promotional activities".

High-frequency data continue to point to a faster rate of deflation in China in recent weeks. One reason is lower energy prices, which should bring some economic relief to downstream firms, but building materials and steel prices are also falling. Cyclical momentum the economy remains very weak.

Rather than getting the tariff-reprieve boost seen in the official PMI, and other PMIs across the region, the S&P PMI fell to 48.3 in May, the lowest since September 2022. Export orders dropped to the lowest since July 2023. That fed into weaker staffing and continued falls in prices.

The Liberation Day tariffs caused the PMIs to fall sharply in April. Postponement of the tariffs triggered a recovery in May. But the bounce in the headlines was mild, and Korea, where according to S&P "new orders fell at the...strongest rate in almost a decade", continues to lag.

Even with a rebound in semi exports, overall Korean exports continue to go sideways. As a result, the underperformance relative to the rest of the region of the last 6M continues. This presidential election won't affect that, though it should bring stronger fiscal policy, boosting domestic demand.

We don't get many expenditure inputs to estimate components of GDP each quarter. One of the few that is available is net exports, which can be proxied by the change in the monthly balance in goods and services trade. Data today show that remains high, but is now falling YoY, and will dampen Q2 GDP.

After falling sharply in recent months, there was a modest bounce in consumer confidence in May. The consumer mood may have been given a boost by politicians focusing more on the cost of living crisis. But that crisis remained clear in today's survey, with inflation expectations remaining elevated.