China Services Activity Picks Up In January, Hiring Hits 6‑month High, Survey Shows

Economic

Summary:

The RatingDog China General Services PMI, compiled by S&P Global, edged up to 52.3 in January from 52.0 the previous month, the highest reading since October. The 50-point mark separates expansion from contraction.

China's services activity expanded at its quickest pace in three months in January, buoyed by stronger new orders and pushing hiring to its highest since July last year, a private-sector survey showed on Wednesday.

The reading, coupled with the manufacturing survey, points to a tentative improvement for some businesses at the start of the year. However, they contrast with an official survey which showed both factory and services activity losing momentum. Barclays analysts say recent readings suggest the front-loaded measures may be insufficient, or may still need time to translate into improved sentiment and activity.

According to the RatingDog survey, the Composite Output Index, which combines manufacturing and services performance, rose to 51.6, compared with 51.3 in December.

Growth in new orders in the services sector picked up from December. New product launches also lifted export business.

To cope with rising workload, service providers hired more full-time and temporary staff at the start of the year. Although marginal, the increase marked the first rise in headcount since July 2025.

Average input costs increased at a slower pace in January, while output charges fell as some service providers lowered prices to support sales.

Business sentiment remained positive as companies were hopeful that expansion plans and better market conditions would lift growth in sales and activity this year. However, confidence slipped from December and was below the 2025 average, reflecting concerns over the global economic outlook.

Looking ahead to February, Yao Yu, founder of RatingDog, said consumption-oriented services such as culture and tourism, catering, and instant retail may see growth driven by the extended nine-day Spring Festival holiday. Producer services, by contrast, are likely to enter a seasonal lull due to factory closures.

According to data by China's Tujia, an online holiday rental portal, booking of homestays grew 48% week-on-week from January, with February 17-19 being the most popular period.

The Spring Festival holidays, as the new year celebrations are known in China, run from February 15 to 23.

This year's Lunar New Year travel rush, the world's biggest annual human migration, kicked off on Monday and will last for 40 days.

Authorities expect a record 9.5 billion passenger trips to be made during the travel period, surpassing the 9.02 billion trips made last year.

Source: TradingView

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Economic

A Post-Pandemic Construction Surge

Construction activity in Singapore has accelerated sharply since the pandemic, driven by a wave of large-scale infrastructure and commercial developments. Mega projects such as the new terminal at Changi Airport, an $8 billion Las Vegas Sands expansion, and the Tengah General and Community Hospital are reshaping the city-state’s physical landscape. The hospital alone is expected to add 4,000 patient beds by 2030, underlining the scale and long-term nature of current investment.

In January, the Building and Construction Authority projected construction demand of up to 53 billion Singapore dollars this year, equivalent to about $42 billion, representing a 15% upward revision from earlier estimates. This surge reflects sustained confidence in public and private sector spending rather than a short-lived rebound.

Why Costs Remain Among The World’s Highest

While the boom supports economic growth, it has intensified cost pressures in an already expensive market. Construction consultancy Turner and Townsend estimates that building costs could rise by as much as 5% this year. This increase is associated with ongoing supply chain disruptions affecting materials such as cement and ready-mixed concrete, extended lead times for plumbing and electrical systems, and sharply higher prices for semiconductors embedded in modern building infrastructure.

Labor constraints add another layer of complexity. Beyond shortages of general workers, Singapore faces a particularly tight market for professionals, managers, executives, and technicians. These capability gaps tend to affect project timelines and quality, especially for specialist subcontractors on large developments. The pressure on skilled labor is correlated with rising costs and delivery risk, rather than being the sole cause of delays, but it remains a persistent structural challenge.

Redesigning The Workforce Model

To cope with labor shortages, firms are rethinking how human capital is deployed. One emerging response is “double hatting,” where employees are trained to take on multiple roles. Engineers, for example, are increasingly expected to operate digital tools that reduce repetitive tasks, allowing them to focus on higher-value execution and coordination work.

This approach enables companies to deliver projects with smaller teams while maintaining output levels. Analysts expect strong contract awards to continue through 2026, followed by four years of elevated construction activity, suggesting that workforce flexibility will remain central to sustaining the upcycle.

Technology As A Cost-Control Lever

Technology adoption has become a defining feature of Singapore’s construction response. Contractors are shifting away from labor-intensive building toward high-specification industrial and infrastructure projects, supported by prefabrication and enterprise-level digital systems. These changes aim to improve cost efficiency and reduce dependence on scarce labor.

Robots and drones are playing an expanding role. Some firms already use drones combined with artificial intelligence to inspect building facades, while new models are being developed to wash and paint exteriors, cutting the need for scaffolding and reducing safety risks. Painting robots offer a stark productivity comparison, with one machine capable of covering up to 1,500 square meters per day, compared with around 200 square meters for a human worker.

Although such equipment can cost between $70,000 and $120,000 per unit, the investment is expected to improve margins over time. From April, the Building and Construction Authority will introduce new grants for smaller firms to invest in automation and robotics, targeting manpower savings of up to 50%. These measures are designed to address efficiency challenges rather than directly suppress costs, yet they influence long-term competitiveness.

A Prolonged Upcycle, Not A Peak

Despite the scale of current projects, industry analysts believe Singapore’s construction cycle has not yet reached its peak. Estimates now suggest contractor earnings will crest in the 2028 to 2029 financial years, later than previously forecast. Earnings per share growth across covered firms is projected to range between 16% and 41% from 2026 to 2028, reflecting sustained demand and operational leverage from technology adoption.

Looking further ahead, Singapore’s master plan over the next 10 to 15 years includes new parks, residential developments, and subway lines. With land scarcity intensifying planning trade-offs, decisions about what to build and what to preserve are becoming more complex, reinforcing the need for precision and efficiency rather than expansion alone.

Building Beyond Economics

Rising construction costs inevitably feed into a higher cost of living, particularly in private housing, which has become increasingly expensive. Yet Singapore’s infrastructure projects are often delivered on time and within budget, a result of long-term planning focused on functional needs rather than short-term political cycles.

Increasingly, construction is seen as a tool for shaping urban quality rather than simply adding capacity. New developments emphasize integration with surrounding neighborhoods, environmental features such as rainwater harvesting, and broader goals of livability. This approach reflects a strategic evolution from building for growth to designing for resilience, positioning Singapore as a case study in how technology and governance can partially offset the pressures of one of the world’s costliest construction environments.

Source: CNBC

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Daily News

[Quick Facts]

1. Iran's Foreign Ministry says it is consulting on a venue for Talks with the U.S.

2. The meeting between the Israeli PM and the U.S. Envoy lasted over three hours to discuss the Iran issue.

3. Trump signs Appropriations Bill, ending partial U.S. government shutdown.

4. Bank of Japan starts selling ETFs.

5. Barkin: The Fed focuses on returning inflation to the target level.

[News Details]

Iran's Foreign Ministry says it is consulting on a venue for Talks with the U.S.

On February 3rd, local time, Iranian Foreign Ministry spokesperson Baghaei commented on the coordination process for potential talks between Iran and the United States, stating that a negotiation plan has been formulated and talks are expected in the coming days. Consultations are underway to determine the venue, which will be announced immediately once finalized.

Baghaei said that, in principle, the location and timing of the talks are not complex issues; Turkey, Oman, and several other countries in the region have expressed willingness to host the talks, which Iran finds very valuable.

The meeting between the Israeli PM and the U.S. Envoy lasted over three hours to discuss the Iran issue

On February 3rd, local time, Israeli Prime Minister Benjamin Netanyahu met with visiting U.S. Special Envoy for Middle East Affairs Steve Witkoff. The meeting lasted more than three hours. Also present were U.S. Ambassador to Israel Mike Huckabee, Israeli Defense Minister Yoav Katz, IDF Chief of Staff Herzi Halevi, Mossad Director David Barnea, the head of Israeli Military Intelligence, Air Force Commander, and others. A statement from the Israeli Prime Minister's Office said Netanyahu told the U.S. side during the meeting that Iran has repeatedly proven itself untrustworthy and incapable of honoring any commitments.

Trump signs Appropriations Bill, ending partial U.S. government shutdown

On February 3rd, local time, U.S. President Donald Trump formally signed the government funding bill in the Oval Office, ending the partial federal government shutdown that began on January 31st. The resolution came after the House of Representatives earlier voted to pass an appropriations bill funding several federal departments. The bill provides budgets for these departments through September 30th (the end of the current fiscal year), and also grants the Department of Homeland Security — recently embroiled in controversy over immigration enforcement actions — a two‑week temporary funding extension, allowing Congress to continue negotiating improvements to the department's operations.

Bank of Japan starts selling ETFs

Kyodo News reported that data released by the Bank of Japan on February 3rd, showing its balance sheet as of January 31st, indicates the central bank has begun selling exchangetraded funds (ETFs). The sale amounted to about ¥5.37 billion in book value, and the Bank also sold approximately ¥100 million in real estate investment trusts (REITs).

The Bank of Japan had previously acquired large amounts of ETFs under its massive monetary easing program and currently holds around ¥37 trillion in ETFs. To avoid a sharp drop in stock prices, it will adopt a strategy of selling in small tranches to gradually exit from monetary easing.

At its monetary policy meeting last September, the Bank decided to sell ETFs at an annual pace of about ¥330 billion. Governor Kazuo Ueda has said that, if calculated simply, it would take more than 100 years to complete the sales.

Barkin: The Fed focuses on returning inflation to the target level

Richmond Fed President Thomas Barkin said in a speech on Tuesday that last year's interest rate cuts by the Federal Reserve stimulated the labor market, and officials are now focused on bringing inflation back to the central bank's target level. He believed that in the effort to complete the final mile toward our inflation goal, those rate cuts served as insurance to support the labor market.

As uncertainties fade, the economic outlook is improving, but risks remain because hiring is concentrated in a few industries and inflation remains above the Fed's 2% target.

Although overall demand in the U.S. economy has proven resilient, this is largely due to the construction of AI infrastructure and spending by wealthy consumers. If the AI sector cools, it could hit business investment and the stock market, and when wealthy households see their net worth decline, their consumption may weaken.

[Today's Focus]

UTC+8 18:00 Eurozone January HICP

UTC+8 21:15 U.S. January ADP Employment Change

UTC+8 23:00 U.S. January ISM Non-Manufacturing PMI

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Economic

Forex

A Window Created By Dollar Volatility

China is attempting to capitalize on a rare moment of vulnerability in the global monetary system. Heightened geopolitical uncertainty linked to the economic policies of Donald Trump has unsettled markets, pushing the US dollar to four-year lows while driving investors toward traditional safe havens. Gold prices have surged to record highs above $5,500 an ounce, reflecting a broad reassessment of risk rather than a sudden loss of faith in the dollar itself. This environment has nevertheless created space for China to argue that reliance on a single dominant currency exposes the world to political and financial shocks.

Against this backdrop, China’s Communist Party journal Qiushi released previously private remarks by Xi Jinping, outlining ambitions for the renminbi to evolve into a currency widely used in international trade, foreign exchange, and global pricing. While no immediate shift in the monetary order is expected, the sharp decline in the dollar since Trump’s return to office has altered perceptions about whether alternatives can gain incremental ground.

Why Reserve Currency Status Matters

The dollar’s dominance has shaped the global economy since World War II and the Bretton Woods system, granting the United States enduring advantages in borrowing costs, financial influence, and sanctions power. Today, the International Monetary Fund recognizes several reserve currencies beyond the dollar, including the euro, yen, pound sterling, and the renminbi, yet their roles are not equal. According to IMF data, the dollar still accounted for roughly 57 percent of global foreign exchange reserves last year, compared with about 20 percent for the euro and only around 2 percent for the renminbi.

For Beijing, expanding the renminbi’s role is less about outright replacement and more about reducing exposure to US financial pressure while increasing strategic autonomy. This reflects a correlation between geopolitical tension and currency diversification rather than a direct causal shift away from the dollar driven by market fundamentals alone.

Policy Moves To Elevate The Renminbi

China has spent more than a decade laying the groundwork for broader renminbi use. Authorities have expanded foreign access to domestic stocks, bonds, and commodity markets, streamlined cross-border payment systems, and encouraged settlement of trade in renminbi rather than dollars. These efforts gained momentum after Western sanctions on Russia following the invasion of Ukraine, as China remained a key trading partner and renminbi-denominated transactions surged to record levels.

Officials at the People's Bank of China have framed this strategy as part of a transition toward a multipolar currency system. Last summer, central bank governor Pan Gongsheng stated that the renminbi had become the world’s largest trade finance currency and the third-largest payment currency. This growth reflects practical usage in trade corridors linked to China rather than a wholesale shift in global reserve preferences.

Global Reactions And Strategic Hedging

Concerns over US trade policy and sanctions have encouraged some countries to reduce reliance on the dollar at the margin. European Central Bank President Christine Lagarde has argued for a stronger international role for the euro, while emerging economies increasingly view currency diversification as a form of risk management. Within the BRICS grouping, discussions about alternative reserve arrangements have further unsettled Washington, prompting Trump to warn of punitive tariffs should such initiatives materialize.

These developments illustrate a growing desire among states to hedge rather than abandon the dollar. The behavior is driven by correlation between political risk and diversification strategies, not by a clear causal loss of confidence in the dollar’s underlying liquidity and institutional support.

Why The Dollar Remains Hard To Displace

Despite Beijing’s ambitions, major obstacles limit how far the renminbi can advance. Capital controls remain a central constraint, restricting the free movement of money into and out of China and discouraging global investors from holding large renminbi reserves. Financial institutions also remain wary of regulatory opacity and political intervention, factors that contrast sharply with the transparency and depth of US financial markets.

China’s own economic priorities further complicate the picture. Maintaining a relatively weaker currency supports export competitiveness, creating tension between domestic policy goals and the requirements of a widely trusted reserve asset. These structural realities suggest that while the renminbi’s international role can expand, it is unlikely to approach the scale of the dollar or even the euro in the foreseeable future.

An Incremental Shift Rather Than A Revolution

China’s strategy reflects a calculated assessment of global trends rather than an expectation of imminent dominance. The weakening dollar and rising geopolitical fragmentation offer an opportunity to gain incremental influence, particularly in trade finance and bilateral settlements. However, the foundations of dollar dominance remain intact, supported by deep capital markets, institutional credibility, and network effects that cannot be replicated quickly.

In this sense, Beijing’s push is best understood as an effort to narrow the gap rather than overturn the system. The global financial order may become more diversified over time, but the renminbi’s rise is likely to be gradual, constrained, and complementary rather than transformational.

Source: CNN

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Economic

A Controversial Dual Role Comes To An End

Stephen Miran has stepped down as chair of the White House’s Council of Economic Advisers, ending an unusual period in which he simultaneously held a senior White House position and served as a governor at the Federal Reserve. The resignation was confirmed late Tuesday by White House spokesperson Kush Desai and follows a commitment Miran made during his Senate confirmation process. His decision aligns with long-standing norms designed to preserve the Fed’s independence from direct political influence, even though no formal rule explicitly barred his dual role.

Miran was appointed to the Fed’s seven-member Board of Governors by Donald Trump in September, after Adriana Kugler resigned unexpectedly. He completed Kugler’s term, which officially ended on January 31, but under existing rules, he is permitted to remain on the board until a successor is confirmed by the Senate. While previous administrations have appointed White House aides to the Fed, it has been customary for those individuals to fully relinquish executive branch roles before assuming monetary policymaking responsibilities. Miran instead took an unpaid leave, a choice that drew criticism and intensified scrutiny.

Implications For Monetary Policy Governance

The episode matters because Fed governors play a direct role in interest rate decisions and bank regulatory policy, areas where institutional independence is closely guarded. Miran had stated when appointed that he would resign from the Council of Economic Advisers if he stayed on the Fed board beyond January 31, and his resignation fulfills that pledge. The situation illustrates the delicate balance between political appointment power and the expectation of nonpartisan economic governance, highlighting how even temporary overlaps can raise concerns about perceived influence rather than direct causation over policy outcomes.

Miran’s departure also adds momentum to speculation surrounding upcoming changes at the top of the Fed. Trump has nominated Kevin Warsh to replace current Fed chair Jerome Powell, whose term as chair expires on May 15. Due to a structural quirk, Powell could remain on the Fed’s board even after stepping down as chair, limiting Trump’s ability to immediately appoint an additional governor. As a result, many analysts expect a sequence in which Warsh first fills Miran’s seat and is then elevated to chair in May, although this pathway has not yet been officially confirmed.

While Miran’s resignation does not directly alter monetary policy in the short term, it reinforces the sensitivity surrounding Fed governance at a moment of leadership transition. The situation reflects correlation rather than direct policy causation between political maneuvering and central bank decisions, yet it underscores how personnel shifts can shape expectations in financial markets. As confirmation battles and succession plans unfold, attention is likely to remain focused on whether the Fed’s institutional independence is preserved in both form and practice.

Source: AP

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Daniel Foster

Middle East Situation

Russia-Ukraine Conflict

Traders' Opinions

Energy

Data Interpretation

Economic

Commodity

Daily News

Political

Oil prices pushed higher on Wednesday, extending gains from the previous session after a series of confrontations between the United States and Iran in the Strait of Hormuz stoked fears of a wider conflict in the critical energy chokepoint.

Brent crude futures climbed 65 cents, or 1.0%, to $67.98 per barrel. In the U.S., West Texas Intermediate (WTI) crude was up 69 cents, or 1.1%, trading at $63.90 per barrel. Both benchmarks had already risen by nearly 2% on Tuesday.

Fresh Confrontations in the Middle East

The latest rally is directly linked to two recent military incidents. The U.S. military reported on Tuesday that it had shot down an Iranian drone that approached the Abraham Lincoln aircraft carrier in an "aggressive" manner in the Arabian Sea.

Separately, maritime sources confirmed that a group of Iranian gunboats approached a U.S.-flagged tanker in the Strait of Hormuz, the narrow waterway between the Persian Gulf and the Gulf of Oman.

These events have amplified market uncertainty, which was already heightened by diplomatic friction. Tehran is reportedly demanding that its upcoming talks with the U.S. on nuclear issues be held in Oman instead of Turkey and be limited to two-way negotiations, raising doubts about whether the meeting will proceed as planned.

"Heightened tensions in the Middle East provided support to the oil market," noted Satoru Yoshida, a commodity analyst with Rakuten Securities.

The Strait of Hormuz is a vital artery for global energy, with major OPEC producers like Saudi Arabia, Iran, the UAE, Kuwait, and Iraq using it to export crude, primarily to Asian markets. According to U.S. Energy Information Administration data, Iran was the third-largest crude producer in OPEC in 2025.

US Inventory Data Surprises the Market

Adding to the upward price pressure was industry data indicating a significant drop in U.S. crude stockpiles. According to sources citing American Petroleum Institute (API) figures, inventories fell by over 11 million barrels last week.

This sharp decline contrasts with expectations from analysts polled by Reuters, who had forecast an increase in crude inventories. The market is now awaiting official data from the U.S. Energy Information Administration (EIA), scheduled for release at 10:30 a.m. EST.

Broader Geopolitical Drivers

Beyond the immediate tensions in the Gulf, other global developments are also supporting oil prices. On Tuesday, a trade agreement between the United States and India boosted optimism for stronger global energy demand.

At the same time, continued Russian attacks on Ukraine are reinforcing concerns that sanctions on Moscow's oil exports will remain in place for an extended period.

"India's trade agreement with the U.S. to halt purchases of Russian crude, along with the ongoing Russia-Ukraine war, is also providing support," said Yoshida. He projected that WTI would likely continue to trade around the $65 per barrel mark for the time being.

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King Ten

Economic

Remarks of Officials

Political

The Trump administration is internally discussing plans to formalize a tariff increase on South Korea, a move that would escalate trade tensions between the two allies. Seoul's Trade Minister, Yeo Han-koo, confirmed on Tuesday that U.S. government agencies are consulting on the matter.

The potential action follows a threat from President Donald Trump last week to raise tariffs on Korean goods. The proposed hikes target "reciprocal" tariffs as well as specific levies on automobiles, lumber, and pharmaceuticals, which would jump from 15% to 25%. The administration cited delays in South Korea's legislative process for implementing a bilateral trade deal as the primary reason for the threat.

South Korean Trade Minister Yeo Han-koo speaks to the press at Incheon International Airport about the ongoing trade dispute with the United States.

Trump's Tariff Threat Edges Closer to Reality

Concerns in Seoul are mounting over the possibility that the White House will publish the tariff plan in the Federal Register, the official public record of the U.S. government. Such a step would transform the president's threat into a more concrete administrative action.

"Regarding the issue of putting the tariff plan on the Federal Register, I think that consultations among relevant government agencies are under way," Yeo told reporters. He described the process as a routine administrative procedure but acknowledged that discussions within the U.S. government are ongoing.

Seoul Mounts Diplomatic Push in Washington

In response to the tariff threat, South Korea has launched a diplomatic effort to de-escalate the situation. Minister Yeo arrived in Washington on Friday to dissuade the Trump administration from moving forward.

During his visit, Yeo met with U.S. Trade Representative Jamieson Greer. In their talks, he emphasized Seoul's firm commitment to fulfilling its side of the existing trade agreement, which includes significant investment pledges.

The diplomatic push involves multiple high-level officials. Industry Minister Kim Jung-kwan also met with Commerce Secretary Howard Lutnick, though those discussions reportedly ended without a clear conclusion.

Understanding the Core Trade Commitments

At the heart of the dispute is a trade deal under which Seoul agreed to invest $350 billion in the United States, with an annual cap of $2 billion. In exchange for this and other commitments, Washington agreed to lower its reciprocal tariffs on Korean goods to 15% from 25%.

Minister Yeo suggested that part of the friction may stem from a lack of understanding in Washington about South Korea's political and legislative systems. "I think we might have to continue our outreach to the U.S. as there are aspects of our system that the U.S. side does not fully understand," he noted.

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