Introducing

Robert Brusca

Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.

Publications by Robert Brusca

Germany| Aug 07 2026
German Industrial Output Gathers Strength
German industrial production rose by 0.2% in June, continuing a string of increases. Production in Germany is on an accelerating path. It is unchanged over 12 months, but it has a 0.9% annual rate increase over six months and a 4.5% annual rate increase over three months, a clear acceleration in the rates of growth over the shorter periods.

That trend is accentuated by consumer goods that grow 2.3% over 12 months; output then steps up to a 3% annual rate over six months and advances to 18.9% at an annual rate over three months. Capital goods and intermediate goods interrupt the pattern to some extent. For capital goods, output falls 2.5% over 12 months, then weakens further, falling by 4.2% annually over six months, but it rebounds to grow at a 0.8% annual rate over three months. That's not an accelerating pattern, but there is a recovery over three months. Intermediate goods show a 0.1% increase in output over 12 months, rising to 1.7% annually over six months but then stepping back to a 1% growth rate over three months.

Manufacturing alone also shows accelerating growth as growth rates improve from 12 months to six months to three months. Real manufacturing orders have a convoluted growth rate, with positive growth over 12 months, a decline over six months, and then a small recovery over three months. The pace of real sales, as we saw in yesterday's durable goods orders and sales report, is on a shrinking path.

Industrial surveys generally show sequential deterioration for the sector from the ZEW and the IFO. The exception is the EU Commission industrial index that shows some slight improvement sequentially.

Industrial production results are presented for five other European countries that have issued IP data as of June. These data show acceleration sequentially in Spain, Sweden, and Norway. France and Portugal have complex patterns that end with negative three-month growth rates.

On balance, Germany shows some hopeful trends, with some rebound being led to some extent by the consumer sector. The survey data on industry are not encouraging. Although the picture for the rest of Europe shows some tendency for acceleration, there’s still a good deal of lingering weakness.
by:Robert Brusca
|in:Economy in Brief
Germany| Aug 06 2026
German Orders Surge on Domestic Strength
German orders in June rose by 3.1%, after a 0.3% crawl higher in May and a sharp 3.2% decline in April. Domestic orders have been gradually building a head of steam after falling 2.4% in April; they rose by 1.3% in May and surged by 7.8% in June. Over the same timeline, there was a 3.8% decline in foreign orders in April; that decline was trimmed to 0.3% in May and became a tiny 0.2% increase in June. In all cases, there was a progression from relatively deep negative numbers in April in the wake of the start of the attacks on Iran. That weakness led to stabilization and a moderate increase in May, and then to a lot more strength in June as markets and economies became hopeful that the Iran war was winding down as both parties seemed to be getting slightly punch-drunk.

Sequential Growth Patterns The progression of orders from 12 months to six months to three months is not clean, with a lack of overall trend for orders. Foreign orders move to progressive weakness from 12 months to six months to three months. Domestic orders are somewhat chaotic in their pattern but show a 13.5% increase over 12 months and an explosive 29.6% annual rate increase over three months. The foreign orders series is weak and somewhat concerning, but the domestic order series maintains quite reassuring growth over 12 months and three months.

Quarter-to-Date Orders In quarter-to-date (QTD), the data are now complete even if they are preliminary, with total orders rising 5.8%, foreign orders rising 6.9%, and domestic orders rising 3.8%, all at annual rates. The queue standings on the levels of orders as of June show strong 85-to-90-percentile levels of activity for total orders and foreign orders, with domestic orders coming in at a milder, but still above-median 64.1 percentile standing. When we rank orders in terms of their year-over-year growth rates, total orders have a 73.0 percentile standing, with foreign orders at a 52.5 percentile standing and domestic orders at a 93.0 percentile mark. The growth performance favors domestic orders, but the level of orders that is being achieved is better for foreign compared to domestic orders using historic comparison standards.

Sales/Real Sector Sales Turning to sales, we find them somewhat more erratic in June, showing a decline for manufacturing overall, with all manufacturing sectors showing month-to-month drops except consumer durables where sales have a 2.5% gain. Manufacturing sales in real terms rose by 0.2%, with mixed sector performance. In April, all sales made a 0.1% gain in real terms amid convoluted sector patterns. The sequential performance of retail sales by sector shows the overall trend is progressively weakening, with all manufacturing sales falling by 0.4% over 12 months, by 0.8% at an annual rate over six months, and by 3.7% at an annual rate over three months. Sales decline for all categories over three months, for most categories over six months, and for all categories over 12 months. The sales picture is not particularly healthy, but fortunately that's a look back at what consumers and businesses have done, while, presumably, the orders data are more robust and looking ahead. The queue standing levels for real sales are quite weak. In fact, for manufacturing, the overall ranking is just above 50% at a 50.9 percentile standing. Capital goods have a very strong 71.8 percentile standing. Intermediate goods have a standing just short of their median at a 45.8 percentile. But real sales for consumer goods, consumer durables, and consumer nondurables are extremely weak, in the bottom 10-percentile standing or even weaker. Turning to rankings based upon the pace of sales on year-over-year data, all of the metrics for real sector sales are below the 50% mark, which means they are below their respective medians for the period. However, the rankings are generally clustered around a 40-percentile standing, which is moderately weak, within roughly 10 percentile points of the median. While not encouraging, it's not devastating.

Industrial Confidence in Europe Industrial confidence measures for Germany, France, Italy, and Spain, providing a quick look at the large countries in the European Monetary Union, showed negative readings in June for all the countries, with slight progress made in June compared to May in three of the four countries (France being the exception showing slippage). The averages over 36 months and 12 months again show consistently negative numbers, with very little change over three months compared to 12 months. The rankings of the industrial confidence readings, which are diffusion indexes from the EU, show only Spain with a ranking above its 50-percentile, putting it above its past median. However, France has a 44.3 percentile standing, which is close to the median; Italy has a 37.8 percentile standing; and Germany has the lowest standing at its 32.1 percentile.
by:Robert Brusca
|in:Economy in Brief
Global| Aug 05 2026
Total PMIs Show Confused Trends
The total or composite PMIs in July released by S&P showed mixed performance although the average and median readings for the 25 reporters improved slightly month-to-month. The average reading rose to 52 in July from 51.3 in June, and the median reading rose to 52.2 from 50.8.

Contraction is mostly avoided, but not rare In July, seven of the reporters showed total PMI gauges below 50, indicating that those economies are contracting. The seven economies with that characteristic are France, Russia, Brazil, Zambia, Ghana, Egypt, and Qatar. For the most part, these are smaller economies. France, of course, is a large European economy; Russia is engaged in its ongoing war with Ukraine, which is taking a toll on its economy; and Brazil is one of the large BRIC economies.

The contracting count worsened, then stopped In June, nine countries had PMIs below 50, the same as in May. Over broader periods, such as three months, 10 countries show PMI values averaging below 50. That compares to seven over six months and six over 12 months. The slippage has actually progressed from 12 months to six months to three months, then improved on monthly data.

Contraction seems more structural than cyclical The shaded parts of the table correspond to PMI values below 50. We see that there's a long string of those readings in France, Russia, Egypt, and Qatar. For those countries, the one-month appearance of a below-50 reading in July was not episodic; it was structural. Germany has had two months in a row and a three-month average below 50; however, Germany turned stronger in July. The European Monetary Union as a whole had two months below 50 as well as very weak three-month and six-month averages, but it also turned higher in July. Zambia has a recent string of ongoing weakness; Ghana has a nearly unbroken streak of values below 50 as well. Brazil’s signal is like a flashing light.

There is good news However, the good news is that only eight of the reporting areas actually got weaker month-to-month in July, compared to nine in June and 11 in May. Over three months, we see 13 areas reporting PMIs that have weakened month-to-month. That compares to 21 that weakened over six months. On year-over-year comparisons, only 11 are weaker period-to-period. The weakening trend is much reduced in the recent monthly data.

Lingering weakness PMIs chronicle a great deal of lingering weakness, although for the most part conditions aren't worsening month-to-month over the past two months. However, there are a number of areas where activity, as designated by the PMI values, is declining. The sequential readings confirm that the growing weakness is a real factor and has only reversed in the last two months, if that result can be durable. How much of this weakness and subsequent rebound is linked to the war in Ukraine and the new deterioration and stalemate in the Middle East; those up-and-down dynamics are going to be hard to puzzle out.

Activity and performance assessments The queue percentile standings show that 12 of the 25 reporting entities have standings below their medians on data back to January 2021. That means nearly half are weaker in July than they have been on readings back to January 2021. On that timeline, conditions have not been strong, with an average diffusion (PMI) reading across the board of 52.3 and a median of 51.4. It has been a low-growth period in general.

The rich get richer? Even if only slowly... The large, developed economies, for the most part, have PMI rankings and queue standings above their 50th percentiles. The exception is the United Kingdom, with a 47.8 percentile standing. The exceptions also include the BRIC countries: Russia having a 26.9 percentile standing, India with an exceptionally low 9.0 percentile standing, Brazil with an 11.9 percentile standing, and China with a 22.4 percentile standing.
by:Robert Brusca
|in:Economy in Brief
Switzerland| Aug 04 2026
Swiss Inflation: Nonexistent; Switzerland: Existent!
Swiss HICP inflation in July was zero month-to-month. In June, it was zero month-to-month. In May, it was 0.1% month-to-month. Year-over-year HICP inflation is 0.7%, compared to a year ago when it was 0.1% over 12 months.

The same metrics viewed through the domestic measure of Swiss inflation are even lower. In July, domestic prices rose 0.1%; in June, they fell by 0.1%; and in May, they were unchanged. The 12-month inflation rate for the Swiss CPI in July was 0.4%; a year ago the 12-month change was 0.2%. Pinch me! Am I dreaming?

And yes, Switzerland is on the same planet as the United States, Europe, and the United Kingdom.

Swiss inflation going back to 2020 has a peak year-over-year rate in its core of 2% based on monthly data. The headline 12-month rate at its peak was 3.4%. Excluding administered prices, the peak inflation rate in Switzerland was 2.7%. One of the main things that Switzerland has going forward is that the Swiss National Bank (SNB) has incredible credibility. It waited as long as the Fed did to raise interest rates, but it raised rates quickly up to the level of the core inflation rate. Once inflation began to fall, the SNB continued to raise rates until it became clear that the policy rate had begun to hover above the inflation rate. At that point, the bank flattened out its rate profile, then turned into a rate-cutting mode.

Once again after the inflation rate had been arrested and fell below 1%, the SNB continued to cut rates until inflation was at zero and so were rates.

The U.S. has not had the same experience with inflation. U.S. inflation has lingered and the Federal Reserve has continued to hold its policy rate above the 12-month trailing inflation rate.

Swiss performance is unique, suggesting that monetary policy right now is not needed to control inflation, at least not in Switzerland. But this undoubtedly has a lot to do with expectations about the behavior of the SNB and the dynamics of the Swiss economy and capital markets.

Swiss inflation began to track the 1% mark in early 2024. The core rate fell into line at the same time, with very little lag. This also is very unlike the U.S. experience.
by:Robert Brusca
|in:Economy in Brief
Global| Aug 03 2026
S&P Global Manufacturing PMIs Are Mixed But Improved
The S&P manufacturing PMIs for July show a group of 17 countries plus an aggregate for the European Monetary Union. Across these 18 observations, there is broad, but uneven, improvement on a month-to-month basis.

The median reading for July increases slightly to 51.9, a gain of 0.5 diffusion points on a month-to-month basis.

44.4% of reporters are improving on a month-to-month basis. Measured over three months compared to six months, 33.3% are improving; over six months compared to 12 months, 66.7% are improving; and over 12 months compared to 12 months ago, 83.3% are improving. Despite the monthly statistics showing a mixed performance and evidence of some soft spots, the general trend for manufacturing is to show that improvement is in place.

The percentile standing for the July diffusion indexes on data back to 2021 shows an average standing of the 69th percentile across the 19 reporters. That means since 2021 the observations have generally been stronger than this only about 30% of the time, marking this as an ongoing improving situation for manufacturing.

The reporting countries with percentile standings below their medians (below a 50% standing on a queue basis) are China, Russia, India, Brazil, Indonesia, and Turkey.

The strongest countries on a queue percentile standing basis are Japan with a 91.0 percentile standing and Mexico with an 88.1 percentile standing. In addition, South Korea has an 85.1 percentile standing and Malaysia has an 83.6 percentile standing.

At the bottom of the table, we have groupings of countries by various areas or characteristics. The developed group—which includes the United States, the United Kingdom, the European Monetary Union, Canada, and Japan—has an average queue standing in its 72.5 percentile. The BRIC countries have a standing in their 21.6 percentile and the average for Asia is in its 64.7 percentile. While the BRIC countries are lagging, generally speaking they had been performing better during the past; as of July, China has a diffusion reading for its manufacturing sector at 49.2, Brazil at 47.5, Russia at 50.7, and India at 53.5. The BRICs generate a low percentile standing, but their July diffusion readings are more centrist than the rankings might seem to imply.

This report shows manufacturing engaged in some amount of recovery. However, there's still a lot of unevenness in the global economy, still a lot of work left to do, and still a lot of geopolitical risks in play.
by:Robert Brusca
|in:Economy in Brief
Europe| Jul 31 2026
EMU HICP Flares After Sag
The harmonized index of consumer prices (HICP) for the European Monetary Union (EMU) surged in July, rising by 0.5% after having sagged in June with a -0.1% month-to-month change. The ceasefire that had temporarily been arranged with Iran in June has given way to the reality of ongoing war and ongoing strikes against tanker traffic. While there are some ongoing talks among the combatants, there is not a lot of hope for another ceasefire that's going to last. Both the United States and Iran have their own particular needs to have a ceasefire. But Iran took the last ceasefire as an opportunity to rebuild, recalibrate, apparently strengthen its military capabilities, and then extend its demands for control of the Strait of Hormuz. These were all nonstarters from the U.S. perspective, and I presume from a global perspective as well. The conditions necessary to underpin a ceasefire with some staying power simply do not exist anymore. The U.S. has resorted to hitting Iran harder.

As a result, energy prices have moved back up and inflation in July moved back up in the EMU. Inflation shows a 2.9% rise over 12 months, a 4.1% annual rate of increase over six months, and a 2.6% annual rate of increase over three months. All of these are excessive with respect to the ECB objectives.

Over six months inflation is excessive in the EMU and in its four largest economies: Germany, France, Italy, and Spain. The best (the lowest) inflation performance is in Germany at 3%, while the worst inflation performance is in Italy at 5.2%. These four countries all exceed the ECB’s desired pace of 2% over 12 months as well. Twelve-month Spanish inflation runs at 3.8%, while in France inflation nails down the low side at 2.3%. Over three months, conditions are more varied because we're mixing in this one-month period of very good inflation news with two months of not so good inflation news. Over three months, Spain still logs a 4.4% increase in its HICP at an annual rate, but France logs 1.2% and Italy logs 1.6%; Germany's pace comes in at 2.8%.

We have core inflation or inflation excluding energy metrics (ex-energy in the case of Germany) for three of the four large countries. These metrics for July ranged from a 0.2% increase month-to-month in Germany to a 0.4% increase in core inflation in Italy. The ex-energy or core measures are within reach of the ECB’s target when applied to the core on a country basis. For Germany, the pace is 2.2% over 12 months, on the low side; for Italy, it’s at 1.6%. But excessive inflation persists for Spain where the core measure is at 3%. Over six months, results are highly similar to what we see over 12 months, but over three months we see German inflation at 2.3%, Italy at 2.4%, and Spain at 3.1%. All of these core or ex-energy measures become uncomfortable over three months.
by:Robert Brusca
|in:Economy in Brief
Europe| Jul 30 2026
European GDP Improves in Q2
GDP in the second quarter accelerated for most of the countries in the monetary union. The overall figure for the EMU improved to 1.8% as an annualized quarter-over-quarter gain from 0% in the first quarter and 0.8% in the fourth quarter. Among the 8 early reporters of GDP, there was a deceleration in Italy, Germany, and Belgium, while the other five countries showed an increase in their growth rates in the second quarter compared to the first quarter.

The four largest monetary union economies showed a technical weakening, but at the one-digit level, growth was 1.1% in the second quarter, the same as in the first quarter. The rest of the monetary union saw an increase in growth from -2.9% annualized in the first quarter to a gain of 3.7% at an annualized rate in the second quarter, a huge shift.

On a year-over-year basis, growth rates improved for all but three countries: Belgium, France, and Spain. For Spain, the year-over-year growth rate was unchanged at 2.7% in the second quarter. For France, the growth decelerated from 0.8% in the first quarter to 0.7% in the second quarter; for Belgium, the growth rate slowed from 0.8% to 0.5%.

The overall monetary union growth rate rose to 1% in the second quarter compared to a 0.5% increase in the first quarter. The four largest economies showed stronger growth at 1.1% year-over-year compared to 1% last quarter, while the rest of the monetary union showed a GDP gain of 0.5% compared to a year-over-year decline of 0.9% in the first quarter.

Evaluating growth over a longer timeline, three early-reporting monetary union members have standings in their growth rates above their respective 50th percentiles. Those countries are Portugal at 69.6%, Italy at 60.9%, and Spain at 51.1%.

The four largest monetary union economies, pooled together, have a growth ranking year-over-year in their 43.5 percentile. The rest of the monetary union has a growth ranking at the 25th percentile. From this, we can conclude that most of the growth has come from the four large economies, even though in the current quarter it's the smaller economies that seem to be performing much better.

On these same timelines, the United States posted a weaker quarterly growth rate in the second quarter at 1.5%, compared to 2.1% in the first quarter. U.S. growth at 2.1% year-over-year is slower than its 2.7% year-over-year growth rate in the first quarter; it has a queue-percentile standing of its growth rate on data back to 2001 in its 37.5 percentile, a standing well below its historic median for the period. U.S. consumer spending held up pretty well in Q2 and business investment spending remained strong, but the trade account did a turnaround and sucked a lot of life out of the growth rate in the second quarter, keeping the U.S. economy as an important driver of global growth.
by:Robert Brusca
|in:Economy in Brief
France| Jul 28 2026
French Household Confidence Improves
Household confidence in France improved in July, rising to 86.4 from 84.3 in June. Confidence was last higher in March, and the average for confidence over the last 12 months is 87.7. The July value, despite its climb, is still below that average; confidence is still weak in a historic context. According to data back to 2001, the current confidence metric in July has a 16.2 percentile ranking, an extremely weak reading. The mean of confidence readings back to 2001 is 95.1. The July reading is nearly nine points below that.

Weak but improved living standards readings: Living standards in July improved slightly compared to June. The assessment of the last 12 months is -79 compared to -81 previously. However, the 12-month average is a rating of -74; the July reading is still short of that. Looking to the next 12 months, living standards are expected to improve; the reading of -59 in July compares to -65 logged a month ago. It compares to a 12-month average of -61. The expectation for living standards over the next 12 months is higher than it has been on average for the last 12 months, although the reading itself is still quite weak. The standing in its 10th percentile for a current rating at -59 is below its full-period average of -38.

Fewer unemployment worries: Unemployment over the next 12 months is expected to be less of a concern, but the reading in July drops to 55 from 61 in June; however, the July reading is still above the 12-month average of 52. The ranking for unemployment concerns has a 72nd percentile standing, putting it in the top third of its historic range of readings.

Inflation fears drop, comparatively: Price developments show that over the past 12 months inflation has been a concern, with the July reading falling relative to June to 17 from 22, but this reading is much higher than its 12-month average of +2. However, looking to the next 12 months, the July reading is -33 compared to -15 in June, and it compares to -20 on average over the last 12 months. Inflation expectations are for conditions to show weaker inflation pressures. The ranking of the July reading is at its 44th percentile, below its historic median; the medians on rankings occur at a ranking of 50. Of course, all these readings will be dependent on how oil prices evolve.

Saving/spending: Both the favorability and the ability to save improved in July compared to June; both readings in July are above their respective 12-month averages. The rankings of these observations are around their high 90th percentiles; for the favorability to save, the reading is the highest in the whole period back to June 2001. The ability to save is often not a good reading but rather one that reflects consumer defensiveness, and we see that as we move to the next metric, the favorability to make a major purchase. In July, that reading improved to -36 from -38 in June, but it's weaker than its 12-month average of -31.8. In historic context, it's extremely weak and has an 8.3 percentile standing. So, the favorability to make a major purchase is in the lower 10th percentile of all monthly observations back to June 2001, indicating considerable consumer defensiveness.

Financial situation: The financial situations over the past 12 months and projected over the next 12 months show slightly improved readings compared to June. The past 12 months reading is weaker than its 12-month average, while the expectation for the next 12 months is the same as its 12-month average. The rankings of the two financial situations are just below their respective 40th percentiles, placing them about 10 percentile points below their historic medians.

Summing up The consumer in France sees some improvement in July, and conditions remain mixed across these various components. But most of the rankings for the components are quite weak, with the exception being concerns about unemployment and the favorability to save, which was a defensive reading. The weighting scheme for this survey gives us a slightly more positive read on the month, but it's clear that the French consumers are still concerned about economic conditions and the future.
by:Robert Brusca
|in:Economy in Brief
Global| Jul 27 2026
An Update on Withering Money Growth Metrics
Money works with a lag but sometimes it’s reported with a lag too: U.S. and U.K. money supply data lag the results for the monetary union and for Japan by one month. Monetary trends currently based on the most up-to-date data, which are either May or June depending on the country we're looking at, show that three-month money supply growth, and credit growth in the case of the monetary union, have slowed compared to six months, except in the case of Japan. In Japan, for the six-month and three-month growth rates are identical at 1.9% overall; growth rates are lower over three months and six months compared to 12 months.

Real money balances: The growth rate of real money balances shows the step-down in growth in the monetary union from 1.6% over 12 months to a 1% annual rate over six months to a 0.6% annual rate over three months. Over the same sequence of dates, private credit in the monetary union has gone from 1.2% over 12 months to a pace of 1.4% over six months, and then down to 1.1% over three months. In the U.S., money growth over this period has decelerated from 2.5% over 12 months to 2% at an annual rate over six months to -0.4% over three months annualized. The U.K. shows a slightly different pattern for real money balances that grow 2.4% over 12 months, accelerate to 3.4% annually over six months, but then back down to a 1.6% annual rate over three months, showing a net deceleration from 12 months to three months but with an intervening bulge. In Japan, the money growth slowdown is monotonic, from 0.5% over 12 months to a 0.3% pace over six months to a -1.2% pace over three months.

Pattern reversal: Nominal money growth, which had shown some acceleration early in the year, is now beginning to show deceleration, and this is before central banks have generally begun to raise rates, although there have been ongoing rate increases of a slight amount in Japan and also the start of a tightening cycle in the European Monetary Union. In the U.S., there's a new head of the central bank and policies there are expected to shift, but the jury is out on what to expect, as is often the case with a new chairman. There are a variety of views on what he plans to do; he will most likely make his reputation by what he in fact does rather than by what he says about what he intends to do. On balance, growths in the U.S., the monetary union, and Japan are all showing deceleration with a slight exception from the U.K. But generally speaking, money supply no longer is showing a moderate disturbing acceleration pattern; in real terms, money growth has lost a great deal of steam, particularly in the U.S. and Japan, where three-month growth rates of real money balances are declining and show negative rates of growth.

Summing up These are new trends, and they are not much talked about in markets because markets don't speak the language of money supply growth much anymore. However, it's a good idea to continue to look at money supply and what it does. Just because central banks aren't targeting money doesn't mean that it isn't relevant anymore; it just means that central banks have put their attention someplace else. At present, central bankers seem to be arguing about where their attention should be. It could be a good time for us to keep close tabs on what money supply is doing.
by:Robert Brusca
|in:Economy in Brief
Japan| Jul 24 2026
Japan’s CPI Is Misbehaving as BOJ Faces a Stern Test
The Bank of Japan is in a bit of a policy pickle. Inflation has picked up. After a long period of super-low inflation and interest rates, the policy rate itself has only been lifted to 1%. The BOJ faces a world with key geopolitical strains, higher inflation, supply chain disruptions, and rising oil prices with gains in other commodity prices as well. The war in Iran and the closure of the Strait of Hormuz, after a brief respite in June, is back in force. The future is again clouded and has led to negativism.

The yen has been weakening; that has put the BOJ in another difficult spot. So far, it has been unwilling to use interest rates to defend it. And we know that intervention is only a fleeting tool and not any sort of lasting solution.

But with all this on its plate, the BOJ has to deal now with some unexpected fiscal stimulus. The Takaichi government, like every Japanese government, has a special relationship with the central bank having two representatives at BOJ meetings, one from the MOF and another from the Cabinet Office. These representatives do not vote but can request that policy moves be delayed. Still, the BOJ has become more independent since 1998 when governing laws were changed. BOJ is directed to cooperate with government and to act independently. Earlier this year, when inflation flared on rising oil prices, the Takaichi government took steps to mute the impact on Japan’s inflation. So its inflation data have been dressed up a bit by inflation-suppressing government programs, which also make it seem less pressing that the BOJ act.

Still, inflation is heating up. The core inflation rate, which excludes fresh foods & energy, is now at 1.7% year-on-year, while the suppressing impact of some of the government programs is still in force. For its part, the BOJ has seen firms reporting more pass-throughs of prices and cost increases, making it more wary of building inflation pressures.
by:Robert Brusca
|in:Economy in Brief
France| Jul 23 2026
French Manufacturing Survey Improves
French manufacturing saw its climate index rise to 101.3 in July from 100.2 in June, still below its May level and exceeded by readings from December 2025 to February 2026. Apart from those four readings, the French index was last stronger in March 2024. On data back to April 2023, some 40 observations, the industry climate index has been higher only six times. Still, on data back to 2001 the current climate reading has a 53-percentile standing. While the current reading is slightly above par on a long historic timeline and just above its median reading, which occurs at a ranking of 50, its 53-percentile ranking marks it as slightly above its historic median; however, it is quite strong compared to the past 40 months (3 1/3 years).

Manufacturing production expectations have improved slightly over the past year from -11.9 to -10.1, with a 38.6 percentile standing, below its historic median.

The recent trend for production has improved even more sharply over the past year from -2.5 to +7.3, with a 59.8 percentile standing, well above its historic median. Interestingly, when asked about their own industry, survey respondents were less upbeat as the current reading at -0.6 was better than its year-ago -5.0, but only at a 16.3 percentile standing, a rather dismal showing.

Orders & demand and foreign orders & demand both moved up from their year-ago readings, improving by some six to eight points from their respective year-ago levels. Orders & demand overall have a 69.9 percentile standing, quite a solid reading, compared to foreign orders & demand, with only a slightly above-median 50.7 percentile standing.

Pricing finds both the own likely price level and the overall manufacturing level higher than they were a year ago. Own prices are higher by 3.1 points while manufacturing prices in general are deemed higher by 18.8 points, a massive difference. But the price levels by each response, placed in a percentile standing mode, produce standings at about the 75th percentile for each of them.

The graph shows French manufacturing prices on another up-down cycle. The down phases triggered rapidly this time; however, it is probably going to give way to another spurt with the Middle East progress unraveling that progress; it has already happened in the real world but is not yet reflected in published economic reports. That means we will have to monitor the industry recovery path closely again.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Jul 22 2026
U.K. Headline and Core Inflation Rates Slow Sequentially as BOE Gets Ready to Meet
Inflation progress in the U.K. continues to make its way despite a month-to-month increase in the pace for the HICP measure, as well as for the CPIH headline and its core. The two headline measures for the CPIH and the HICP accelerated in June to 0.2% after each posted a small 0.1% increase in May. The CPIH core, which excludes energy, food, alcohol, and tobacco, advanced by 0.3% in June after rising by 0.2% in May.

Monthly data are ‘noisy’: These are minor and technical month-to-month changes since we're measuring inflation in tenths; this is an increase in the smallest unit that we present. If we look at the inflation progress over broader periods of three months, six months, and 12 months, we find there are ongoing decelerations of inflation in the HICP, the CPIH, and the CPIH core measures. I will continue this discussion solely in terms of the CPIH measures.

Sequential inflation: Headline inflation for the CPIH clocks 2.8% over 12 months; the annualized rate falls to 2.6% over six months and falls further to 1.8% annualized over three months, a clear pattern of progress. Core inflation on the CPIH gauge is also 2.8% over 12 months; it also falls to 2.6% over six months, but its deceleration over three months is to a pace of 2.3% (instead of 1.8% for the headline). Still, that's ongoing progress and the three-month 2.3% pace of core inflation is getting quite close to the Bank of England’s 2% objective.

Component behavior: We're going to further evaluate inflation by looking at how the components behave over different periods. In June, inflation accelerated in 66.7% of the categories. In May, it accelerated in 58.3% of the categories, whereas in April, it accelerated in only 50% of the categories. Inflation acceleration is going in the wrong direction to appease monetary authorities. However, these are calculations made across categories without taking any weighting into account. The headline performance takes weighting into account; the weighted core and the headlines are moving in the right direction.

Sequentially, on this broader basis, trends look better. Over 12 months compared to 12 months earlier, inflation is accelerating in only 33.3% of the categories, but then over six months compared to 12 months, the inflation rate is increasing in half of the categories. Over three months, that diffusion measure falls to 41.7%; i.e., only 41.7% of the categories are experiencing accelerating inflation over three months compared to six months. So, these are much better trends when viewed over a broader period. To bring a little bit more life into these abstract diffusion figures, I've also presented the median and average pace of inflation over three months, six months, and 12 months at the bottom of the table. There you can see that the median pace of inflation on this sequence is 3.5% over 12 months and six months, and then it falls to 3% over three months. The average pace of inflation over 12 months is 3.5%; it stays at 3.5% over six months and then decelerates to 2.9% over three months.

Ranking 12-month inflation rates: The final column ranks the current inflation rates across categories and for the headlines on data back to 2000. The HICP measure has a 62.9 percentile standing, the CPIH measure has a 72.5 percentile standing, while this CPIH core has a 79.6 percentile standing. These standings tell us that the inflation rates for these categories are high relative to where they have been since 2000. At the bottom of the table, we can see that the median inflation rate since 2000 has been 2.2%, while the average pace of inflation has been 2.5%. So, over the full, back-to-2000 span, inflation has been slightly north of the BOE target, depending on which measure we look at, the median or the average. The median pace has been quite close, while the average has been half a percentage point too high. A current ranking that puts the inflation rates above their respective medians (and a ranking of 50 represents the median) evaluated the individual category as above its own median at a time when the median and averages overall were already too hot. For all but three of these categories, inflation is still high by a historic experience (above a ranking of 50%). That probably continues to require a somewhat restrictive interest rate from the central bank. Across categories, the highest-ranking inflation is a 91.1 percentile standing for communication, followed by an 84-percentile standing for restaurants & hotels and standings in the 79th percentile for transportation as well as for the core CPI taken as a whole. Inflation rates below their medians for the period back to 2000 are for food & nonalcoholic beverages, furniture, household equipment & maintenance, and healthcare.
by:Robert Brusca
|in:Economy in Brief