FXTRADING Economic Data Summary (Asia-Pacific | 08/04)

Eurozone Manufacturing Continues to Improve

Eurozone manufacturing continued to recover in July, with the final S&P Global Manufacturing PMI rising to 51.9, up from 51.4 in June, marking a three-month high and the strongest improvement since April. The output index increased from 51.7 to 52.9, reaching its highest level in nearly 52 months, indicating that corporate production activity is accelerating.

However, the manufacturing recovery still relies mainly on the completion of previously accumulated orders. Although new orders continued to grow, the pace of expansion remained limited. Companies continued to manage inventories and reduce hiring as they remained cautious about future demand uncertainty. From a regional perspective, Germanys manufacturing sector recovered relatively quickly, with PMI reaching one of its highest levels in more than four years, while France and Spain continued to underperform, highlighting persistent differences in the pace of recovery across the euro area. FXTRADING analysis believes that eurozone manufacturing is gradually emerging from its downturn, but the recovery in demand remains relatively slow.

Swiss Inflation Continues to Ease

Swiss inflation continued to slow in July, with CPI falling 0.1% month-on-month, while the annual inflation rate declined to 0.4% from 0.5% in June. Lower prices for air transportation, diesel and gasoline, along with discounts on clothing and footwear, were the main factors driving the overall decline in prices.

From a structural perspective, falling import prices were an important factor behind the slowdown in inflation. Import prices declined 1.1% month-on-month in July, significantly more than the 0.4% decrease recorded in June, while annual import inflation remained at 0.0%. In contrast, domestic goods prices rose 0.1% month-on-month and remained unchanged at 0.5% year-on-year, while core inflation stayed stable at 0.3% annually, indicating that domestic price pressures remain contained. FXTRADING analysis believes that Switzerland‘s current inflation trend is mainly influenced by external price factors. Lower import costs have helped ease overall inflation pressure, while domestic prices remain stable. The Swiss National Bank’s future policy direction will continue to depend on changes in inflation and economic growth.

Australian Manufacturing Returns to Expansion

Australias manufacturing sector continued to improve in July, with the final S&P Global Manufacturing PMI rising to 52.0 from 51.5 in June, reaching its highest level since January and remaining in expansion territory for the fourth consecutive month. Production activity and new orders both improved, suggesting that the manufacturing sector is gradually moving away from its previous weakness.

However, the strength of the recovery remains limited. Although factory output recorded its first increase in nearly six months and new orders returned to expansion, the pace of growth remained modest. At the same time, elevated input costs and supply chain risks continued to limit companies‘ ability to expand production, while changes in external geopolitical conditions could once again increase inflationary pressures. FXTRADING analysis believes that Australia’s manufacturing sector has shown signs of stabilization and recovery, but the foundation of the rebound remains fragile. Future economic performance remains vulnerable to cost pressures and changes in external risks.

Japanese Industrial Production Rebounds Strongly

Japans industrial production exceeded expectations in June, rising 1.3% month-on-month, up from 0.1% in May and above the market forecast of 0.7%. This marked the third consecutive monthly increase and the strongest growth since January. Industrial production increased 4.2% year-on-year, reversing the 2.1% decline recorded in May, with significant improvements across multiple manufacturing sectors.

In contrast, June retail sales increased only 0.5% year-on-year, well below the revised 5.0% growth in the previous month and the market expectation of 3.1%. Retail sales fell 4.1% month-on-month, marking the largest decline since April 2021, with weaker sales reported across food, department stores, fuel and other sectors. This indicates that household consumption remains under pressure from elevated living costs. FXTRADING analysis believes that Japan‘s economy is currently showing a divergence between strong manufacturing performance and weak consumer demand. Improving industrial production will help support economic stability, but the pace of recovery in household spending remains a key factor influencing the Bank of Japan’s future policy adjustments.