The Economic 'Canary In The Coalmine' Has Hit A High Note

The beginning of a new month brings a wave of economic data, including the important South Korean trade report.

Korean exports accelerated to a year-over-year growth rate of 7.7% in August, up from 2.6% in July.

The pace of growth was a 7-month high. And it was much higher than the 3.8% growth expected.

Economists across Wall Street dub South Korean exports as the global economic canary in the coal mine.

Korean trade data is extremely sensitive to the economic activity in developed and emerging Asia. It usually comes before the first trading session of the month in Asia, which makes it the first of the world's major economic indicators to be released.

Here's a break down of the August numbers from Societe Generale's Suktae Oh:

A majority of key sectors showed double-digit yoy growth: auto (43.9%, though due to base effects from last year's large-scale labour strike), ships (26.2%, due to usual volatility in deliveries), mobile phones (25.9%), semiconductors (22.1%) and petrochemicals (12.1%). But sectors like machinery, steel, oil products and display panels contracted from a year ago. In the breakdown by destination, according to the preliminary figures until 20 August, China and US continued to be the key markets for Korea's exports, while the exports to Japan and the Middle East showed negative yoy growth.