Taiwan's export orders data today show another decline in the overseas production ratio, especially for electronics products. That implies some move in the supply-chain from China, which helps boost Taiwan's growth, but at the expense of more direct trade and a surging trade surplus with the US.

Today's data show inflation excluding all food and energy in November at 2% saar. Some of the details are also firm, with the diffusion stable and a further pick-up in rental inflation. That though is still at less than 1%, and anyway, wage inflation now seems more important for the BOJ than CPI.

The weak JPY is having little impact on Japan's export performance. Yesterday's November data show export volumes still very sluggish, and continuing to underperform the rest of the region. Services are doing better, though even here, Japan isn't clearly outperforming.

Services sentiment in the PMI is recovering from the October drop, but not as quickly as in other surveys. The tone on jobs and prices survived that dip, and concerns about "labour constraints and the impact of rising costs", with feed through to output prices, were prominent again in December.

With the strong trend growth in TSMC's sales since the end of 2023 holding, it makes sense that the pick-up in manufacturing wage growth is too. Neither TSMC nor manufacturing are the whole economy, but they are important components, and put Taiwan's cycle in a very different state to Korea.

Yesterday's BIS credit data for Q2 show why shifting to "loose" monetary policy isn't simple. The loosening of 2008-09 kicked off a rise in credit that hasn't stopped even though policy since then has been "prudent", and that in turn been a big obstacle to policy officially turning loose again.

On my estimate, China's seasonally adjusted trade surplus in November reached a new all-time high. This is partly about firm exports, more evident in volume than values. But it is also about weak imports, which however they are measured, have now been going sideways for almost two years.

In YoY value terms, November data confirm that the export cycle has peaked. However, there still isn't much slowing yet because in MoM terms, exports are still gradually trending up. Moreover, at least through October, exports volumes remained strong. Semi is leading the rise.

Today's 2nd release of Q3 GDP data was revised up to 1.2% saar, on the back of stronger capex and exports, but consumption was revised lower. The rise in today's EW survey suggests growth has improved further in Q4. The cycle is solid more than spectacular, but shows no damage from the July hike.

There's no sign of any faltering in the latest acceleration in nominal wage growth that began in 2023. That's true for both full- and part-time workers. For full-time workers, real wage growth is also improving, though so far, the extent of the change is just that earnings are no longer falling.

Inflation has eased, but outside of imported prices/goods, still isn't particularly soft. With the cycle also ok, the central bank won't be rushing to cut. So, while it would be usual to compare Taiwan's economy to Korea, in terms of current monetary policy, it has more in common with Japan.

China rates falling below Japan has attracted attention. Commentary in today's services PMIs explain the context. In China, cost inflation in November fell "to the lowest since the current sequence of inflation began in July 2020". In Japan, by contrast, "inflationary pressures remained marked.".

The PBC has followed up on earlier hints and announced household demand deposit inclusion in M1. That makes sense, and it will moderate the fall in M1. But while HH demand deposits are rising, time deposits are growing more quickly still, and it is this that needs to reverse for cycle recovery.

No wonder the BOK is worried. For exports, there was only a small rebound in November from the weakness of October. And, with exports closely following the lead from the equity market, it is unlikely there will be any renewed recovery from here.

The contrast between the Taiwan and Korean cycles is striking. In Taiwan, retail sales, while now rolling over, have been strong, and the decline is being offset by continued growth in IP. In Korea, weak retail sales aren't getting better, and IP continues to flatline.

Today's monitoring indicator from the government is another sign that the cycle has peaked. Activity is unlikely to get in a lot of trouble if TSMC continues to grow at around 20%. But it is difficult to see how growth can now surprise on the upside.

Profitability ticked up in October, but that was after a big fall the previous month, and the smoothed trend is still down. Relative to GDP, profits have only been lower than they are today in 2008-09 and 2020. The big drag continues to be heavy industry more than manufacturing.

The trend rise in upstream services PPI isn't faltering. With a decent MoM jump, the YoY ticked back up in November to the all-time high of 3.1%. This steady rise remains the clearest indicator of Japan's structural exist from deflation, and suggests also that the BOJ's cyclical story remains alive.

November consumer sentiment remained soft, staying barely above the survey's long-term average. That doesn't suggest consumer spending, which has been weak, is about to revive. At the same time, price expectations, firm all year, ticked up last month, warning that disinflation has run out of steam.

Latest data from the customs administration show no let-up in the export volume surge that began earlier this year. China's exports are growing as quickly they were during the pandemic. That's remarkable, given that in 2021-22 world trade was growing strongly, now it is hardly increasing at all.

It looks like labour market tightness has peaked, but the change isn't big enough yet to impact monetary policy. After ticking up in September, the unemployment rate was stable at 3.4% in October. That keeps it at a level not seen since the early 2000s.

YoY growth in Korean exports in the first 20 days of November didn't do much to reverse the October slump, a decline that feels more significant given the similar drop in the PMI in the last couple of months. Semi exports are still rising, but not much else is.

October's export orders continued to creep up, but nothing more than that, and the DI has turned down, warning of downside risk from here. Admittedly, export orders have been tending to lag actual exports, but with the PMI weakening too, we've probably seen the best of the export cycle.

Today's October FDI data once again illustrate the big reorientation of Taiwan's investment and trade flows away from China and towards the US. For FDI that's been encouraged by Biden subsidies, but Trump doesn't like those, nor the big trade surplus that Taiwan now runs with the US.

The headlines don't show much change in the labour market in October, with the unemployment rate still comfortably below 3%. But while employment overall was stable, that was because of government jobs. Employment in the private sector fell again and is now the lowest since July 2023.

The post-2020 rise in wage growth is holding in manufacturing. In services, it is less obvious, but for the economy overall, the trend in wage growth is still comfortably above 2% YoY, whereas in the 15 years from 2003 it was closer to 1%. This rise, in turn, should raise the floor for inflation.

Including CGBs, the credit impulse is weak, but not terrible, and there's been a tick-up in bank lending and mortgages since August. However, there's nothing to suggest any real momentum in the credit cycle. At the same time, the deflationary move into time deposits continues.

Export growth in the first ten days of November fell to zero. And while the small number of days make this data set volatile, it comes after weakness in broader data for October, both full-month trade, and the PMI. The weakness in exports is a big deal for the BOK when domestic demand is also soft.

There might be some signs of better sentiment feeding into prices, but they aren't strong. Core sequential CPI inflation did get back to zero in October, but the 3mma remains negative. Despite the jump in PMI input prices last month, PPI also continues to fall.

Today's release from the BOJ of consumption activity through September is so-so, with a further moderation from the pick-up seen in June and July. As such, it isn't suggesting a repeat of the pick-up in household consumption that boosted Q2 GDP.