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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
ASIA
Today's South Korean and Taiwan PMI prints for August point to downside risks for the global trade outlook. The first chart below plots the average PMI reading for each country against the YoY change in global trade volumes growth. Note global trade volume figures are only reported up until June of this year.
- Both economies are key bellwethers for the global outlook, so it isn't surprising to see a firm relationship between the two series in the chart below.
- There are of course potential caveats. Today's PMI weakness could reflect greater exposure to both economies to China. Also out today was South Korean export figures for August. This data showed export growth to China continued to ease (-5.4% YoY), while growth to the US and EU remained positive, albeit down from early 2022 highs.
- Aggregate export growth for South Korea continues to moderate though, while Taiwan's export order print fell in July to -1.9%.
Fig 1: North Asia PMIs Flash Global Trade Warning
Source: CPB Netherlands Bureau for Economic Policy Analysis/MNI- Market News/Bloomberg
- The South Korean and Taiwan PMIs also maintain a reasonable correlation with the US ISM reading, more so than the China Caixin PMI, see the chart below. We get a fresh update on the ISM later this evening.
- The market consensus expects a further cooling in the print (51.9 is forecast, versus 52.8 previously).
- Today's weaker PMI prints add to the downside risks to the US ISM print, and PMI prints elsewhere, at face value.
- Of course, in levels terms the US ISM remains comfortably above PMI prints for these North East Asian economies, which still may serve the USD well on a relative value basis.
- It's noteworthy today that both USD/KRW and USD/TWD both printed at fresh cyclical highs.
Fig 2: NEA PMIs & The US ISM
Source: MNI- Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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