Philippine exports inched 7.8% higher

But this was not as strong as analysts expected it to be.

According to Nomura, merchandise exports rose 7.8% in July, improving from the 4.2% increase in June. This was not as strong as we expected, but was nonetheless well ahead of consensus expectations of a 1% decline.

Here's more from Nomura:

This bucks the regional trend, and as we have argued before, may be partly due to the outsourcing of output from Thailand, where the post-flood normalization has progressed relatively slowly in the electronics sector. As such, headline export growth could remain relatively robust over the next few months.

In terms of policy implications, Bangko Sentral ng Pilipinas (BSP) will likely view this as another point of resilience in the economy and hence could argue that the economy does not require further monetary easing.

In addition to likely rising worker remittances following the floods, this also suggests that PHP strength is being driven by the current account, which would make the BSP more tolerant of the currency appreciation. We now expect BSP to stay on hold on Thursday, instead of a cutting the policy rate