Mixed news from Asia in a mix of start of month and quarter reports from Japan, China, Indonesia, India, South Korea and Taiwan and Australia.
But there were no bombs in the reports – despite the best attempts of some bears to get the China doomed story running again.
The overwhelming message was that like Australia (as we saw in yesterday’s Reserve Bank statement and rate hold), economies across our most important trade region have started 2014 on a sluggish, below trend note.
In Australia, the local survey of manufacturing showed another weak month of activity, while the RBA continued its wait and watch approach to the economy – although there was a touch more concern expressed by governor Glenn Stevens about the value of the dollar.
In Japan, the start of quarter Tankan survey of corporate sentiment from the country’s central bank showed a sharp fall in confidence linked to the lift in the country’s consumption tax from 5% to 8%.
That rise was concentrated among retailers who fear a fall in sales and profits – just as there was in 1997 when the tax rose to 5%.
The tax started in 1989 and was raised twice before 1997’s increase – on all occasions the Prime MInisters of the day lost power afterwards (not just for the tax rise).
This increase is an attempt to start trying to put government finances back on track in Japan – it rises to 10% in October 2015, if the government decides to lift it (after whatever fallout happens after yesterday’s rise).
The Japanese government estimates the increase will bring in close to $US50 billion in the year to March 2015, and around $US78 billion in the 2015-16 year.
The survey of more than 10,500 companies showed the mood at big manufacturers rose 1 point from the prior quarter to a reading of 17, a new six-year high, which was the good news.
But that wasn’t backed by confidence in the future. Indeed optimism is fading: the outlook declined 6 points to a one-year low of 8, well below forecasts of 13.
And it was a similar story among large non-manufacturers ( which includes retailers) as confidence improved 4 points, as expected, to 24, the highest in at least a decade, but again the outlook dropped to 13 against market forecasts of 15.
In China the official government survey of manufacturing (which looks at bigger companies, many of them state-owned) showed a small rise to 50.3 from 50.2 in February – and a reading of 51.3 across the final quarter of last year.
The HSBC/Markit survey of smaller manufacturers however dipped to 48 from 48.5 in February’s final reading for the month.
Qu Hongbin, HSBC economist, said in a statement the 48 reading implied that first-quarter GDP growth has dipped below the nation’s 7.5% annual target.
“We expect Beijing to fine-tune policy sooner rather than later to stabilise growth,” he wrote in yesterday’s statement.
In South Korea, inflation edged up to an annual reading of 1.3% last month from the 1% rate in February.
And the country’s exports in March grew faster than the previous month, supporting the view the country’s economy is expanding, thanks to higher offshore demand, especially from the US.
Exports rose 5.2% last month from March 2013 to $US49.763 billion, following a revised 1.5% rise in February.
Imports rose 3.6% from a year earlier to $US45.571 billion in March. The trade surplus in March was $US4.192 billion.
In Taiwan, meanwhile, HSBC/Markit said the country’s manufacturing sector expanded at the slowest pace in six months in March, thanks in part to a slowdown of China, its biggest export market.
The PMI was 52.7 in March, down from 54.7 in February. (Readings above 50.0 indicate on-month expansion and readings below that represent contractions.)
Indonesia’s survey of its manufacturing sector by HSBC/Markit showed a reading of 50.1 for March, down from 50.5 in February. March’s figure was a seven month low.
And in India the survey showed a fifth month of expansion, despite a noticeable slowing in the pace of that growth last month.
The HSBC/Markit survey came in at 51.3 in March, down on 52.5 in February. And the Reserve Bank of India held its key interest rate flat as well.
