MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• Japan labour earnings data was weaker than forecast, with real wages back to sub -2% y/y. We did see household spending stronger than forecast but it remains to be seen if this trend sustains without positive real wages growth. 

AUSTRALIA 

• Q1 household spending volumes showed no growth on the quarter, in line with retail sales, to be up only 0.9% y/y after +1.6% q/q & 2.3% y/y in Q4, consistent with the view that the RBA is likely to ease 25bp on May 20. Private consumption in Q1 GDP is likely to be close to flat when it is released on June 4.

NEW ZEALAND

• There were some tentative signs in the Q1 labour market data that there is some stabilisation but at weak levels. There was a 0.1% q/q rise in employment driven by a 2.2% q/q jump in part-timers though. While the unemployment rate was stable at 5.1%, better than consensus, it appears that the rise in labour supply that was expected didn’t materialise. Thus the data is close enough to what the RBNZ expected in February and another 25bp rate cut on May 28 remains likely.
• Wage inflation slowed with the labour cost index rising 0.5% q/q, the slowest quarterly rate in four years.

SHORT TERM RATES 

• $-Bloc markets were firmer over past week, except for NZ. 

CHINA 

• The People’s Bank of China announced a cut to the seven-day reverse repurchase rate to 1.4% from 1.5% and also to the RRR. Support for the equity and property markets was also revealed.
• April’s PMI services unexpectedly dipped in April in signs that the US tariff war is hurting.
• April trade data showed stronger than expected exports, with trade surpluses rising against the EU and ASEAN but falling against the US as tariffs impacted. 

ASIA 

• Indonesian Q1 GDP was slightly weaker than expected falling 1% q/q nsa to be up 4.9% y/y down from Q4’s +5.0% y/y and the slowest since Q3 2021. With growth softening and inflation well within Bank Indonesia’s (BI) corridor, there is room to cut rates but only when it is confident of rupiah stability.
• April CPI inflation in Thailand and the Philippines opened the door for more central bank easing.

ASIA EQUITY FLOWS 

• A stronger USD for now seems not to deter flows with major markets enjoying strong inflows and the regional inflows at US$5.7bn for the week.

GLOBAL 

• The New York Fed’s measure of supply chain pressures actually eased further in April to -0.29 to its lowest reading since October 2024 but is not far from neutral. It is yet to show any supply-chain problems from tit-for-tat tariffs between the US and China.