MNI ASIA PAC Weekly Macro Wrap:

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Executive Summary:

JAPAN 

• Japan Q1 capex printed well below forecasts. The company profits print was better than forecast though. This result, all else equal, may leave businesses in a solid place to deliver firm wage outcomes, which remains a key policy goal for the authorities. Real labor earnings rose in y/y terms for the fourth straight month. 

AUSTRALIA 

• The RBA is likely to be reassured by the easing in unit labour cost and compensation growth. However, Australia’s productivity problem continues with Q1 recording its weakest quarter since Q3 2024. ULC trends in H2 are likely to be watched closely especially for any indirect effects from the Fair Work Commission’s 4.75% minimum wage rise decision.
• Q1 GDP slowed rising 0.3% q/q with annual growth stable at 2.5% y/y, the equal highest since Q1 2023. Private consumption and investment were the drivers but that came at the cost of higher imports which contributed to the largest net export detraction since Q1 2024. Data centre investment drove the latter two.

NEW ZEALAND

• Export volumes rose 2.8% q/q in Q1 to be only 0.1% y/y higher while import volumes rose 2.2% q/q to be up 10.5% y/y, the fastest since Q4 2021 with strength across both goods and services. NZ saw a 2.0% q/q deterioration in its terms of trade in Q1 as the decline in export prices exceeded that of import prices. The level remained above Q3 2025.

SHORT TERM RATES 

• Amid ongoing uncertainty surrounding any Middle East peace deal and its implications for oil prices, interest-rate expectations across the $-bloc through December 2026 were modestly mixed over the past week with the US (+3bps) and Australia (+7bps) firmer and Canada (-8bps) and New Zealand (-4bp) softer. 

CHINA 

• China's RatingDog May PMI Moderated, yet still topped survey estimates. The PMI fell to +51.8 from +52.2 in March for a sixth successive print above 50. 

SOUTH KOREA 

• On the back of the extremely strong May exports earlier from Korea, the S&P Global South Korea PMI manufacturing jumped again for a new high of +54.8.
• The May CPI release adds further support to our view of a rate hike by the BOK at the next meeting in July. At +3.1% CPI YoY is now above both the BOK target and forecasts - with the release topping survey forecasts.

ASIA 

• An improvement in domestic demand has helped to drive an increase in the ASEAN S&P Global manufacturing PMI in May, the first rise since February. Growth in the month driven by output and domestic orders and confidence indicated an improving outlook. Input cost and selling price pressures eased in May but remained elevated at close to the 2022 highs.
• The RBI held rates steady as expected, but announced measures to boost the rupee. 

ASIA EQUITY FLOWS 

• South Korea outflows continue to dominate. Taiwan and Thailand have been more positive.