FXT Economic Data Summary (Asia-Pacific | 09/14)

US Inflation Pressures Remain Elevated

US CPI rose 0.4% m/m in August, up from 0.1% in July, while the annual rate held at 3.4%. Energy was the main driver, reversing from a 1.5% decline to a 2.1% increase, with gasoline prices up 3.9% and accounting for more than one-third of the monthly CPI gain. Food prices rose 0.1% m/m, while annual food inflation eased to 2.7%.

Core CPI rose 0.3% m/m, above the 0.2% forecast, while the annual rate eased from 2.5% to 2.4%. Shelter and services excluding energy both increased 0.3%, while airfares, lodging and communication costs rose 2.7%, 2.4% and 2.3%, respectively. FXT analysis suggests that although annual core inflation continues to ease, firmer monthly price pressures indicate that underlying inflation is cooling slowly, keeping the Fed cautious about inflation risks.

UK Economic Growth Beats Expectations in July

UK GDP grew 0.4% m/m in July, up from 0.3% in June and well above expectations for no growth. GDP also expanded 0.4% in the three months to July, marking an eighth consecutive month of expansion. Services grew 0.4%, led by a 3.7% rise in administrative and support services, a 2.4% increase in information and communication, and 3.5% growth in computer programming and consultancy, while wholesale and retail trade fell 1.0%.

Manufacturing output rebounded from a 0.5% decline to 0.9% growth, beating the 0.4% forecast, while industrial production recovered from a 0.2% decline to a 0.2% increase. Eight of 13 manufacturing subsectors expanded, with computer, electronic and optical products up 5.2% and pharmaceuticals rising 3.4%, while construction edged up 0.1%. FXT analysis suggests that steady services growth and a strong manufacturing rebound have strengthened the UK economys near-term resilience, although the durability of the recovery still requires confirmation.

Japan PPI Eases but Price Pressures Remain Elevated

Japans PPI inflation eased from a revised 7.7% to 7.6% y/y in August, still above the 7.4% forecast, while prices fell 0.2% m/m after rising 0.4% previously. Lower prices for electricity, gas and water, agricultural and fishery products, and petroleum and coal products were the main contributors to the monthly decline.

Import cost pressures also eased. Yen-based import prices slowed from 29.3% to 24.8% y/y and fell 3.0% m/m, while contract-currency import prices eased from 17.8% to 16.7% y/y and declined 1.0% m/m. The yen appreciated 2.4% during the month, further reducing import costs. FXT analysis suggests that while Japans upstream inflation is cooling, overall price pressures remain elevated and the risk of cost pass-through to consumers persists, leaving room for further BoJ tightening.

New Zealand Manufacturing Continues to Expand Moderately

New Zealands BNZ Manufacturing PMI eased from 54.3 to 53.1 in August but remained above both the 50 expansion threshold and its long-term average of 52.5. Production fell from 57.1 to 54.2, deliveries from 55.5 to 52.6, and employment from 52.2 to 50.0, indicating continued but slower manufacturing expansion.

Demand remained relatively resilient, with new orders rising from 53.6 to 54.9 and finished stocks increasing from 53.4 to 56.4, among the stronger components of the survey. However, 55.7% of respondents remained negative, suggesting business confidence has yet to recover meaningfully. FXT analysis suggests that manufacturing momentum has softened, but improving orders continue to support near-term activity, while weaker employment remains the key risk to watch.

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