Business confidence remains weak, and prices haven't fallen back. The one change in the June surveys was a further rise in exporter sentiment. That is starting to look more significant.
If you want to follow just one indicator in China, this is a good candidate. Li Yang has referred to it as "lying flat". If it doesn't change, it is very unlikely the trajectory of nominal growth will either.
After flat-lining for much of 2022 and 2023, China's exports have now risen anew. After rising 20% during the pandemic, volumes have now increased a further 5%. That lift isn't being seen elsewhere in Asia.
With YoY export prices falling, China is exporting deflation. But most of the region has been too. The data continue to suggest export deflation from China is more cyclical than structural.
April SPPI was revised down, but the SAAR through May remains around 4%. With wage growth up, the BOJ's new measures of SPPI by labour content suggest inflation remains well-supported.
There's nothing in the June consumer confidence survey to shift the BOK. Confidence was neither strong nor weak. General price expectations ticked down, but picked up for property.
Employment in May hitting a record high and unemployment edging down to a 23-year low aren't strong reasons to think the tightening cycle is over.
Catching up on wages, inflation, activity and the BOJ. Overall, growth is weaker, and inflation stronger, trends that are likely to intensify after the bank's lack of action earlier this month.
A summary of what happened on East Asia Econ last week, and what to look for in the next seven days.
Given the confidence the bank has been expressing, the BOJ meeting this week was disappointing. By raising the RRR, Taiwan's CBC, by contrast, was somewhat hawkish.
10D prices show YoY PPI is on track to turn positive in June. That might, though, be it: MoM prices have ticked down so far this month, with the YoY rise all about the base effect.
Regulatory changes are causing big swings in deposit data, so caution is needed. But looking at M1 in relation to M2 should cancel some of the noise, so the fall in that ratio is concerning.
A slide pack looking at cyclical and structural issues. The story is strongest in Japan and Taiwan; there's the potential for a break in trends in China; while we find Korea less interesting right now.
In today's Q2 BSI survey, overall sentiment didn't change much. But firms continued to report record levels of worker insufficiency, and capex intentions remained strong.
There's obviously noise from month to month, but the step-change in wage growth since the pandemic – following an earlier acceleration in 2017 – looks to be holding.
On a headline basis, the labour market is tight, but the details aren't so strong. Moreover, while employment hasn't fallen much, it does feel peaky, particularly given the weakness of the cycle.
PPI, as expected, was stronger in May. But any positive impact on market sentiment will be dampened by renewed weakness in core CPI.
The export data for the first 10 days tell the same story as other recent indicators: there is an export recovery, but it is modest, and doesn't look to be gaining further momentum.
The fall in the EW survey isn't surprising given higher inflation. But it shows the BOJ's dilemma: keep policy loose as aggregate demand is weak, or normalise to try to lift the JPY and real incomes.
A refreshed slide pack looking at China today and the experience of Asia in the 1990s, with a focus on deflation and rates, exports and mfg, and household income and consumption.
A summary of what happened on East Asia Econ last week, and what to look for in the next seven days.
Consumption isn't as weak as consumer confidence suggests: recently released full-year 2023 data show the consumption share surpassing – albeit only slightly – pre-covid levels.
Recently released FoF data for 2022 confirms no big change in household savings. But investment fell as spending on housing dropped. It should be no surprise the CA surplus has been widening.
Far from gaining momentum, Taiwan's exports fell in May. That is at odds with some other indicators for the mfg cycle, but as long as exports are soft, the overall cycle will be too.
China has released flow of funds data for 2022. If anything, they show an economy looking even less like one in BS recession, with the corporate finance reaching a record high.