FXTRADING Economic Data Summary (Asia-Pacific | 06/18)

U.S. Retail Sales Exceed Expectations

The latest data showed that U.S. retail sales rose 0.9% month-on-month in May to $763.7 billion, surpassing both the market forecast of 0.5% and the previous reading of 0.4%. As the most important engine of U.S. economic growth, consumer demand continues to expand at a steady pace.

Looking at the details, growth was not driven solely by automobile or energy sales. Excluding automobiles, retail sales increased 0.8% month-on-month to $623.4 billion, while sales excluding gasoline rose 0.7% to $700.0 billion. Over the past three months, retail sales grew 5.3% year-on-year, indicating that consumer spending remains on a solid footing. FXTRADING believes that U.S. consumption momentum remains strong. Retail sales excluding automobiles and gasoline still increased by 0.8% and 0.7%, respectively, demonstrating resilient household spending that should continue to support overall economic growth.

Services Sector Drives Higher Core Inflation in the Eurozone

Eurozone inflation data for May further suggest that price pressures are spreading across a broader range of sectors. Headline inflation rose from 3.0% in April to 3.2%, while core inflation increased from 2.2% to 2.6%, indicating stronger underlying inflationary pressures.

By component, services remained the largest contributor to inflation, adding 1.61 percentage points to the headline rate. Energy contributed 0.98 percentage points, food, alcohol and tobacco added 0.36 percentage points, and non-energy industrial goods contributed 0.23 percentage points. At the same time, inflation disparities among member states remained significant, with Sweden recording just 1.1% inflation while Romania posted 9.7%. FXTRADING believes that inflationary pressure in the Eurozone is gradually shifting from energy to services. With core inflation rising to 2.6% and service prices continuing to climb, the European Central Bank is likely to remain cautious when considering future monetary policy adjustments.

Service-Sector Price Pressures Remain Elevated in the United Kingdom

The UK's May inflation figures came in below market expectations, providing the Bank of England with some room for flexibility. Annual CPI inflation held steady at 2.8%, below the expected 3.0%, while the monthly rate slowed from 0.7% to 0.2%. Core inflation edged up slightly from 2.5% to 2.6%.

However, price pressures remain concentrated in the services sector. Goods inflation eased from 2.4% to 2.0%, while services inflation accelerated from 3.2% to 3.7%. This suggests that imported goods price pressures are easing, but wages and labor costs continue to push domestic service prices higher. FXTRADING believes that overall inflation in the UK is becoming more stable, but services inflation rising to 3.7% indicates that domestic price pressures remain persistent. Going forward, the Bank of England will still need to balance economic growth against inflation control.

Japanese Exports Continue to Expand

Japan's exports rose 17.0% year-on-year in May, exceeding expectations of 16.2% and marking the ninth consecutive month of growth. Exports to the United States increased 12.5%, while exports to East Asia climbed 17.9%, with demand from AI-related industries continuing to support growth in electronics exports.

However, export volumes increased by only 0.5% in May, suggesting that improvements in underlying demand remain relatively limited. Meanwhile, imports rose 12.5% year-on-year. Although crude oil import volumes fell 57.3%, higher energy prices and a weaker yen continued to push up overall import costs. Imports from the Middle East declined sharply, while imports from the United States increased significantly. FXTRADING believes that the ongoing AI investment boom continues to support Japanese export growth, with exports rising 17.0% year-on-year in May. However, export volumes increased by only 0.5%, indicating that pricing factors accounted for much of the growth, and further improvement in global demand will remain an important factor to watch.

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