FXTRADING Economic Data Summary (Asia-Pacific | 07/08)

Japans Real Wages Continue to Rise

Japans wage growth continued to improve in May. Real wages increased 1.4% year-on-year, slowing from 2.0% in April but marking the seventh consecutive month of positive growth, the longest streak since 2021. Nominal wages rose 3.2% from a year earlier, slightly below both market expectations and the previous reading, yet remained above 3% for a fourth straight month, the longest such run in 34 years. Regular pay increased 3.0%, overtime pay growth eased to 2.9%, while special payments, including bonuses, rose 5.2%.

Consumer spending also performed better than expected. Household spending fell 0.4% year-on-year in May, outperforming the market forecast for a 2.2% decline and showing a slight improvement from April. Continued wage growth and a narrower decline in household spending suggest that consumers‘ purchasing power is gradually recovering, with domestic demand remaining relatively resilient. FXTRADING Analysis: The continued increase in real wages indicates that the improvement in household income remains on track, while stronger-than-expected household spending provides ongoing support for consumption and Japan’s economic recovery.

Canadas Exports Reach Another Record High

Canadas trade surplus widened to CAD 4.24 billion in May, exceeding both the market expectation of CAD 2.9 billion and the revised April figure of CAD 3.41 billion, marking the third consecutive monthly surplus. Exports rose 0.9% month-on-month to a record-high CAD 77.1 billion, extending gains for a fourth straight month.

Export growth was primarily driven by non-metallic mineral products, as tighter global sulfur supplies boosted related exports by 37%. Exports of aluminum and aluminum alloys surged 50.7%, while consumer goods exports increased 3.9%, offsetting a 2.0% decline in energy product exports. Imports edged down 0.2% to CAD 72.9 billion, mainly due to a 33% drop in imports of gold, silver, and platinum group metals. FXTRADING Analysis: Record-high exports and a larger-than-expected trade surplus highlight the resilience of Canadas external sector, with non-energy products increasingly becoming a key driver of export growth.

Eurozone Factory Prices Remain Elevated

Eurozone producer prices rose 0.2% month-on-month in May, in line with market expectations, while the annual growth rate accelerated from 5.0% to 5.9%, exceeding the consensus forecast of 5.7%. Although monthly price growth slowed from the previous month, producer price pressures remained elevated.

By category, intermediate goods prices increased 1.4%, remaining the main contributor to overall gains. Capital goods and durable consumer goods prices rose 0.2% and 0.3%, respectively. Energy prices declined 1.0%, while non-durable consumer goods prices fell 0.1%, partially offsetting the overall increase. Excluding energy, producer prices still climbed 0.7%, indicating that underlying cost pressures remain persistent. FXTRADING Analysis: Producer inflation in the Eurozone remains resilient, with core price pressures continuing to rise, suggesting that cost pressures on businesses have yet to ease significantly and that the European Central Bank will need to keep a close eye on the pace of disinflation.

US Services Sector Continues to Expand

The US ISM Services PMI slipped from 54.5 to 54.0 in June, slightly below the market expectation of 54.2, but remained firmly in expansion territory. The Business Activity Index eased to 55.4, while the New Orders Index fell to 55.1, indicating that growth in the services sector moderated but remained solid overall. Meanwhile, the Employment Index climbed from 47.9 to 51.2, returning to expansion for the first time in four months.

The Prices Index declined from 71.3 to 67.7, falling below 70 for the first time since February, signaling an easing in cost pressures. Some businesses reported that lower fuel prices had reduced transportation costs, although the impact of earlier increases in energy prices has not yet fully faded. As energy supplies continue to normalize, price pressures are expected to ease further. FXTRADING Analysis: The US services sector continues to expand, while improving employment strengthens the economys resilience. Meanwhile, the continued decline in the Prices Index helps ease inflationary pressures and provides greater flexibility for future monetary policy adjustments.

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