The PBoC will be making stabilizing economic growth a bigger priority. The authorities are obviously concerned over the slowdown of the worldâ€™s second largest economy. In their Q2 monetary policy report this week, policy makers repeated their â€œregularâ€ three objectives of maintaining steady and relatively fast growth, adjusting economic structure and managing inflation expectations. But, they have managed to insert a new statement on growth, saying it would â€œput stabilizing growth in a more important position.â€ This message has already been repeated by the countryâ€™s President Hu earlier this week. China grew +7.6%, y/y, in Q2, the slowest rate since the global financial crisis began.
Below are some other highlights of the week:
- KRW: South Koreas manufacturersâ€™ confidence in August dropped to the lowest level in more than three years as the indicator fell to 70 from 81 in July. Separately, the measure of expectations at non-manufacturing companies also dropped to 69 in August, from 76 in July. Koreaâ€™s finance minister is reported as saying he will do all he can to revive the economy.
- AUD: The Aussie HIA new home sales rose +2.8%, m/m in June, versus a +0.7%, m/m gain in May, increasing for a second consecutive month. Kiwi building permits rose +5.7%, m/m in June after a -7.2 fall in May.
- JPY: The Japan Markit/JMMA PMI fell to 47.9 in July, from 49.9 in June, remaining below the 50 threshold. Separately, the jobless rate fell to +4.3% in June, from +4.4% in May. Also, labour cash earnings fell by -0.6%, y/y, last month, compared with a drop of -0.8% in May. Japanâ€™s household spending climbed +1.6%, y/y, in June, compared with a +4.0% rise in May.
- AUD: Aussie private sector credit rose by +0.3%, m/m, or +4.4% in June, following a +4.0% rise in May. Separately, the number of building units approved fell -2.5%, m/m in June, perhaps it was a small payback given the record +27% rally in May.
- NZD: The Kiwi NBNZ survey improved slightly in July after the sharp fall in June. The activity outlook index, which has a good relationship to GDP, rose to 24 in July from 20.8 in June. However, it remained substantially below levels seen in May and April, pointing to a deceleration in economic growth towards the end of Q2 and the beginning of Q3.
- TWD: Taiwanâ€™s GDP fell -0.2%, y/y in Q2, after a +0.4% rise in Q1, much weaker than consensus for +0.5% growth. However, growth improved on the quarter with GDP expanding +0.8%, up from +0.3% in Q1. In view of the weaker than expected Q2 GDP, the government cut its 2012 GDP growth estimate to +2% from +3% before.
- SGD: Singaporeâ€™s unemployment rate fell to +2.0% in Q2, from +2.1% in Q1.
- KRW: South Koreaâ€™s industrial production fell by 0.4%mom in June, following a revised 1.3%mom gain in May (up from +1.1% estimated previously), weaker than consensus for a 0.1%mom rise.
- CNY: Chinaâ€™s â€œofficialâ€ manufacturing PMI fell to 50.1 in July from 50.2 in June, disappointing consensus expectations for a pickup to 50.5, and at odds with the rise in the HSBC manufacturing PMI. The fall was broad-based across subindices; new orders fell to 49 from 49.2 and exports orders to 46.6 from 47.5 in June. This would suggest that the PBoC could take further easing action by years end.
- KRW: South Korean inflation slowed to +1.5%, y/y in July, from +2.2% in June, much weaker than consensus expectations of +2.0%. With weak growth and inflation towards the lower end of the BoKâ€™s target bands, policy makers are likely to cut rates further, similar to other CBankâ€™s.
- AUD: Aussie house prices unexpectedly rose +0.5%, q/q in Q2 from a revised fall of -0.10%, ending five straight quarters of declines. On an annual basis, prices fell -2.1%, y/y in Q2, following a revised fall of -3.5% in 1Q.
- INR: Indian exports and imports fell -5.5%, y/y and -13.5% in June, respectively. These compare to drops of -4.2%, y/y and -7.4%, respectively, in May.
- JPY: The monetary base in Japan surged +8.6%, y/y in July, following the +5.9% increase in June, suggesting asset buying are finally adding net liquidity.
- AUD: Aussie trade balance for June was at +\$9m surplus compared with a revised-\$313m deficit in May. Other data showed retail sales rising +1% (s.a) in June, following an upwardly revised +0.8% rise in May. The market now expects the RBA to remain unchanged in the near term.
- NZD: Kiwi commodity prices fell for the sixth straight month in July. The ANZ Commodity Price Index fell -0.5% compared with a fall of -2.4% in June.
- KRW: South Koreaâ€™s foreign-exchange reserves rose by +\$1.97b to +\$314.35b in July, compared with +\$312.38b in June.
- CNY: China’s official non-manufacturing PMI fell to 55.6 in July from 56.7 in June. On the other hand, the HSBC services PMI rose to 53.1 in July from 52.3 in June. A similar divergence was seen earlier this week between the official and HSBC manufacturing PMI. The data suggests a mild slowdown is underway in services, cushioning the broader economy from the more severe slowing in manufacturing and preventing a hard landing.
- AUD: Aussie AiG Performance of Service Index fell 2.3 points in July to 46.5, from 48.8 in June. This still leaves the index well above the April lows of 39.6.
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