Asia Week Ahead: Australia’s Inflation Plus Regional Industrial Output
Image Source: Pixabay
Regional industrial production should show mixed trends while Australia's inflation could decline further.
Inflation in Australia to dip further
May inflation should show a further decline after it jumped in April. We estimate the CPI index rose 0.2% month-on-month, which will result in a fall in annual inflation from 6.8% to 6.3%. Following the guidance from the Reserve Bank of Australia's (RBA) minutes from June, where the decision to hike was a very finely balanced one, this improvement in inflation suggests that July could well provide the bank with a chance to pause.
Korean output likely to slip but sentiment to rebound
Industrial production is likely to fall in May mainly due to a reduction in semiconductor production. Two major chipmakers announced plans to cut production in early 2023, a process which generally takes about six months to hit target levels. Thus, weak chip manufacturing activity is expected to have led to a decline in overall IP in May.
Meanwhile, survey results will likely show that consumer and business sentiment has improved. Equity markets rebounded on the back of the AI hype, and interest rates did not change much as the BoK paused for two meetings.
Japan’s manufacturing activity and labor market are upbeat while inflation is likely to heat up
Based on the recent strong PMI readings, we believe that Japan has continued its gradual recovery. Industrial production should show another monthly gain on the back of solid domestic demand and car production. The golden week holiday in May should probably boost service job hiring, and thus labor market conditions are expected to remain healthy.
On the inflation front, Tokyo consumer prices are the key input to the Bank of Japan's policy decision. We think July Tokyo consumer inflation should reaccelerate with both commodity and service prices rising.
China’s industrial profits to remain in the red
May industrial profits are likely to remain very negative. Following a year-to-date year-on-year decline of 18.2% in April, we look for a 21% decline in May.
Singapore’s industrial production to track soft NODX
Industrial production will likely remain in contraction, mirroring the weakness reported in the recent non-oil domestic export figures. While we could see output increase on a monthly basis (1.7%), the overall YoY reading should stay negative (-3.9% YoY). We expect industrial production to struggle in the near term, given our outlook for NODX.
Asia Economic Calendar
Image Source: Refinitiv, ING
More By This Author:
Eurozone PMI Drops Again In June, Confirming Weakness In Economy
FX Daily: The Perks Of An Inverted Yield Curve
U.S.: Dearth Of Housing Supply Keeps Prices And Construction Supported
Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...
more
Comments
No Thumbs up yet!
