Inflation Still Soft in July
|U.S. Review
Inflation Still Soft in July
- The economic calendar was on the sparse side this week, the most important item being this morning’s CPI update on the inflation picture, which was softer than expected.
- Fresh productivity data for the second quarter continued to show a sluggish trend, though it did pick up from Q1. Compensation growth slowed and is declining on an annual basis.
- Strong labor demand was highlighted by the all-time high level of job openings in the June JOLTS report.
Global Review
Recent Economic Developments in South Korea
- The South Korean economy has expanded at a steady, albeit slow pace, over the past few years, and we expect the expansion to continue through the end of 2018. Rising tensions with North Korea clearly represent an immediate downside risk to the South Korean economic outlook.
- The build-up in leverage in the household sector represents a longer-term risk to the South Korean economic outlook. Although we do not look for the central bank to be “jacking up” rates anytime soon, growth in consumer spending could be depressed once a higher interest rate environment finally comes to pass.
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