Paul Cavey

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QTC: Taiwan – domestic demand drivers Q2 growth

Although mainly as capex, exports are feeding into domestic demand in Taiwan in a way that isn't yet visible in Korea. Data today show three-quarters of the 5.1% YoY rise in GDP in Q2 coming from investment, with the remainder being consumption. The contribution from net exports turned negative.

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QTC: Korea – standout weakness in retail sales

The weakness of retail sales in China and Japan is well-known. Less appreciated is the same theme is true in Korea too, with today's June volume data dropping back to 2019 levels. Only in Taiwan do retail sales show any strength, which is important when Taiwan's export story is the strongest too.

Japan – three quick highlights

China – no cycle momentum

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QTC: Taiwan – as strong as it gets

The government's monthly Monitoring Indicator shows economic momentum is about as strong as it gets. That suggests another robust print for GDP when Q2 data are released tomorrow. It also keeps pressure on the central bank.

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QTC: Japan – hard labour market data not as tight as soft

As has been the case for months, hard data show no big change in the labour market: UE is low, and employment high. But the BOJ seems to think the labour market is tighter than these data suggest, placing more weight on the bigger change shown by the Tankan.

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QTC: Taiwan – some price relief for consumers

At least through July, softening inflation has been making consumers feel happier. Likely, the recent typhoon damage will at least cause a pause. And while the price slowdown in theory helps the CBC, there's also the risk of aggregate demand remaining stronger for longer.

Last week, next week

Japan – taking stock

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QTC: China – is this really export of deflation

The CPB data do show that China's export price cycle is somewhat weaker than ROW. But the gap isn't that big, and the trend is similar. Particularly in the context of all the talk of over-capacity, the differences really don't look that big.

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QTC: Japan – core CPI still near 2%

I don't think the BOJ is particularly data-dependent when it comes to headline monthly releases, which tend to be noisy. To the extent that today's July Tokyo CPI does matter, it suggests the underlying story remains unchanged.

Korea – export recovery, domestic weakness

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QTC: Korea - still the same sector story

The BOK business sentiment survey continues to point to two very different dynamics: an export recovery that looks increasingly solid, and a downturn in the domestic economy that shows no sign of bottoming.

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QTC: Japan – services PPI higher again

Core services PPI inflation in June rose 3% YoY for the first time since the early 1990s. This offers evidence of the BOJ's hoped-for virtual wage-price dynamic, with the annual rise in services PPI being led by high labour cost sectors.

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QTC: China – industrial prices stable despite property

The collapse in property market activity is showing up in sharply lower prices for building materials: they've now fallen by 50% from the peak. But overall industrial prices haven't fallen in the same way, and continue to point to PPI inflation of around 0%.

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QTC: Japan – services PMI stronger again

Some lessening of confidence in June made sense given the fall in the JPY, but last month's sharp drop in the services PMI still seemed overdone. In July, it rebounded back to a strong level, with the commentary highlighting rising employment and capacity pressures.

Korea – property price expectations higher

China – cycle roadmap

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QTC: Region – PPI rebounds, even in China

Korea's data today completes the PPI picture for the region for June. It shows two things: that the inflation cycle has modestly picked up, and that most of China's PPI deflation reflects this bigger global cycle rather than local factors specific to China.

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QTC: Taiwan – export orders still sluggish

The recovery in export orders has lost some momentum in the 3M to June. Perhaps there is another leg-up to come, but today's data for Korean exports through the first 20D of July were also more solid than spectacular.

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QTC: Korea – exports solid, not spectacular

Headline export growth in the first 20D of July picked up, but that was because of an extra working day. Adjusting for that and exports grew 11.4%. That's decent, but not showing signs of acceleration.

Last week, next week

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QTC: China – another month of capital outflows....maybe

Today's settlement data again suggest the currency has been coming under more pressure. That is also the implication of $CNY being at the top of the band, though strangely, none of this pressure is being seen in fx reserve data.

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QTC: Taiwan – banner year for exports

The relationship between TSMC sales and Taiwan's macro data isn't precise, but this week's further upgrading of the company's guidance continues to suggest 2024 will be a very strong year for exports, and thus also the economy.

Japan – inflation stable