Data releases this week will show the direction of South Korea's real economy and inflation. U.S. inflation and employment figures are also drawing attention, as both feed into the outlook for American interest rates.
The Ministry of Data and Statistics will release industrial activity data for August on the 30th. In July, overall industrial output was flat, retail sales fell 2.4% from the previous month and facility investment rose 7.5%. Investment in semiconductor manufacturing equipment kept climbing, driving the sharp gain in facility investment. The question for August is whether production and consumption rebounded.
September consumer price data is due on Oct. 2. In August, overall consumer prices rose 3.1% from a year earlier, lifted by a base effect from telecom carriers' fee discounts a year ago. With global oil prices climbing again amid the protracted conflict in the Middle East, attention is on whether September inflation held above 3% or eased into the 2% range.
The Bank of Korea will publish weighted average interest rates at financial institutions for August this week. Market rates have risen clearly following the increase in the base rate. In July, the average rate on new mortgage loans at banks was 4.48%, the highest in two years and eight months. The rate on unsecured personal loans reached 5.97%, also the highest in one year and seven months. Even as lending rates climb, the share of borrowers choosing floating-rate mortgages — which are disadvantageous when rates rise — hit a 12-year high, pointing to a heavier burden ahead.
Among global releases, the U.S. personal consumption expenditures price index for August and the September employment report warrant close attention. The PCE index is a key gauge for the Federal Reserve in setting monetary policy. If inflation rises while employment data comes in better than expected, the odds of a further U.S. rate increase could grow. Core PCE rose 3.3% from a year earlier in July, well above the Fed's 2% inflation target.
Details of the trade agreement reached between the United States and China following the summit between U.S. President Donald Trump and Chinese President Xi Jinping are expected to be released on the 28th.
