FXT Economic Data Summary (Asia-Pacific | 08/25)

New Zealand Retail Sales Volumes Decline

New Zealand retail sales volumes fell 0.5% q/q in Q2, reversing a revised 1.0% increase in Q1 and missing expectations for a 0.1% rise. Excluding autos, sales volumes grew 0.7%, above the 0.3% forecast. Eight of 15 industries recorded declines, led by fuel retailing at -13%, accommodation at -8.0%, food and beverage services at -2.8%, and motor vehicles and parts at -2.3%. Electrical and electronic goods rose 9.2%, highlighting uneven consumer demand.

Seasonally adjusted retail sales values rose 0.9% to NZD 33 billion despite falling volumes. Fuel sales values jumped 12% even as volumes dropped 13%, largely due to higher prices, suggesting stronger nominal spending did not translate into stronger real consumption. FXT analysis suggests household spending remains somewhat resilient, but purchasing power is under pressure, with rising prices masking some weakness in underlying demand.

UK Services Remain Strong

UK Composite Output PMI rose from 52.2 to 52.5 in August, a four-month high, while Services Business Activity PMI increased from 52.1 to 52.8, its highest in six months. Manufacturing weakened, with PMI slipping from 51.9 to 51.5 and the output index falling from 52.9 to 51.2, both five-month lows. Sunny weather and technology investment supported activity, while reduced inventory building weighed on manufacturing growth.

Business confidence continued to improve and job losses eased, but energy prices, supply-chain disruptions and labor costs remained significant pressures. S&P Global said the PMI data were consistent with around 0.3% q/q GDP growth in Q3. FXT analysis suggests services remain the main support for the UK economy, but persistent cost pressures mean the BoE is likely to remain cautious on policy adjustments.

Japan Inflation Picks Up Again

Japan‘s headline CPI rose 1.9% y/y in July, above expectations of 1.7%, while core CPI increased 1.8%, in line with forecasts. Core-core CPI, excluding fresh food and energy, rose 1.9%, moving closer to the BoJ’s 2% target. Fresh food-excluded food prices increased 3.0%, services inflation accelerated from 1.1% to 1.2%, goods prices rose 2.7%, and energy prices shifted from a 0.4% decline to a 0.6% increase, indicating broader price pressures.

A weaker yen continues to raise import costs, while Middle East tensions and higher oil prices add uncertainty to the energy outlook. Manufacturing and services PMIs also improved in August, with firms maintaining relatively strong output price increases. FXT analysis suggests inflation is gradually spreading from imported goods and energy into domestic prices. If economic activity remains resilient, conditions for further BoJ tightening could strengthen.

Australian Economy Expands as Manufacturing Output Contracts

Australias Composite Output PMI fell from 53.2 to 52.5 in August, while Services Business Activity PMI eased from 53.6 to 52.9. Manufacturing PMI held at 52.0, but the manufacturing output index slipped from 50.3 to 49.7, returning to contraction. However, new manufacturing orders grew at their fastest pace since the start of the year, employment edged higher, and business confidence reached a six-month high, indicating continued demand support.

Input cost inflation accelerated again in August, ending the slowdown seen since April. However, firms kept output price increases at their weakest level since the start of the year to support demand, putting further pressure on margins. FXT analysis suggests Australia remains in moderate expansion, but softer services momentum, contracting manufacturing output and renewed cost pressures could complicate the RBAs policy outlook.

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