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

United Kingdom| May 26 2026
U.K. Distributive Trades Survey Is Broadly Weak
The U.K. distributive trades survey in retaliating for the second quarter of 2026 shows some improvement in the business situation expected over the next six months as that reading rose to -15 from -34 in the first quarter, putting it only slightly weaker than its third-quarter 2025 reading of -10. Still, it is a very weak reading.

The employment reading also improved in the second quarter to -30 from -40 in the first quarter. That reading, however, is still lower than its -19 reading in the fourth quarter and its -14 reading on the third quarters of 2025.

Capital spending plans on the quarter for the year ahead registered -52 in the second quarter, compared to -46 in the first quarter; this reading has steadily deteriorated.

Imports have improved slightly in the second quarter, with the reading at 7 compared to 10 in the first quarter and 13 in the fourth quarter.

The expected selling price compared to what it registered a year ago is at 42, compared to 40 in the first quarter; they compared to even stronger values at the end of last year. Expected employment in the second quarter fell sharply to -44 from -23 in the first quarter, and this reading has steadily and strongly deteriorated, particularly in the second quarter itself.

Comparing the trailing 4-quarter to 8-quarter averages shows clear deterioration across the board, except for prices. That clarifies the overall story and trend for retailing.

The retail rankings are uniformly weak, with the exception that the selling price has a 43.6 percentile standing, which is still below its historic median ranking. However, the standings for imports, capital spending, and employment are all below the 10th percentile, with the business situation coming in an 11.4 percentile standing. The expected selling price has a 63.6 percentile standing, well above its historic median (the median occurs at a ranking of 50%). Meanwhile, employment, looking ahead, has only a 2.9 percentile standing, clearly not much of a vote of confidence in the outlook for the economy.

The wholesaling portion of the distributive trades report also registers weak standings, but they are higher than those seen in retailing, with the business situation at an 18.6 percentile standing, imports at a 25.7 percentile standing, and employment at a 17.1 percentile standing, while capital spending plans are at a very weak 5.7 percentile standing. All these metrics are generally stronger than for retailing; they're still poor readings and generally below their respective medians. The only exception is the selling price with a 77.9 percentile standing, which is only a vote of confidence for inflation. The expected selling price compared to a year ago has a 44.3 percentile standing, while employment expectations compared to a year ago are at a 35-percentile standing.

Similarly, in wholesaling as for retailing, the comparison of 4-quarter to 8-quarter averages shows across the board deterioration, except for prices. The distributive trades sector for retailing as well as for wholesaling is fading.

Summing up The United Kingdom distributive trades survey is telling us clearly that it is a weak environment for the distributive trades. The standings of the current readings are weak, and the outlook and forward-looking portions of the survey are weak as well. The economy continues to fight inflation that has been over the top for some time, and inflation is still above target, keeping the BOE inflation-vigilant. Global conditions are mixed with the cutoff of goods shipments through the Straits of Hormuz impacting economies globally. The second quarter survey is a depressing statement on the state of the outlook for the U.K. economy.
by:Robert Brusca
|in:Economy in Brief
Germany| May 22 2026
German Confidence in June (GfK) Remains Extremely Weak
GfK consumer climate for Germany improves slightly to -29.8 in June from -33.1 in May. In terms of monthly point changes, it's a reasonable improvement month-to-month however this is now the 10th weakest monthly consumer climate reading over the last 25 years and so it's an extremely weak reading. Last month was an even weaker reading, but that was the 7th weakest reading all time for this index. All the other even weaker readings were during Covid. This is a very weak report, it ranks 286th out of 296 observations.

A very weak month despite some technical improvement GfK projects a climate figure for June, however, it's underlying data for components are up to date through May. As of May, economic expectations improved slightly to -11.2 from -13.7. Income expectations improved a lot more to -13.0 from -24.4. However, that -24.4 figure was a collapse from -6.3 the month before, so that the rebound in May still leaves a significant net decline over the last two months. We should not be too focused on the month-to-month improvement. Income expectation’s April reading was likely a shock reaction to global events in the Middle East. The propensity to buy index improved to -13.2 in May from -14.4 but once again it's a case of there still being a 2-month decline on the books since the March reading was -10.9 for the propensity to buy. The even weaker propensity to buy readings historically were all in the wake of Covid.

Very weak rank standing On the whole it's another week reading from the GfK survey. This is further underscored by the rank- or the count-percentile standing of the headline which stands in its lower 3.1 percentile. Economic expectations are in their lower 19th-percentile, income expectations are in their lower 13th-percentile and the propensity to buy is in its lower 23.9-percentile. All of these are rankings that are infrequently weaker than their readings in May.

Select European comparisons As a comparison I include the most up-to-date readings for Italy, France, and the UK on confidence. Italy and France have up-to-date readings through April; the UK has an up-to-date reading through May. The three countries all show declines in confidence from April to May; the UK shows a slight improvement from May to June. If we look at the most current readings, the percentile standing for Italy is a 50-percentile standing, which implies that the current reading is right on top of its median. For France it's a 5.8 percentile standing, marking the reading as weaker less than 6% of the time. For the UK, the May standing is a 26.5 percentile standing, just above the lower quartile of its historic queue of data.

Wrap up There was nothing reassuring in these data. The economies are struggling as we saw in the S&P PMI data from yesterday from the early reporters of PMI statistics. Of course, the inflation data are uniformly poor globally, so it remains a difficult time and the consumers are feeling a good deal of pressure from inflation and a certain amount of economic uncertainty.
by:Robert Brusca
|in:Economy in Brief
Global| May 21 2026
Global MFG PMIs Sweep Higher: Damn the Torpedoes!
You may recognize the excerpted headline quote as "borrowing" from US Admiral David Farragut. It is a famous quote from a US Civil war battle in which he charged ahead in his ship regardless of the risk. This month the global manufacturing PMIs themselves are charging ahead regardless of the rise of inflation, the war in Ukraine, the war in Iran, the closure or impedance in the strait of Hormuz, and the mucking up of oil and nonoil supply lines. Full speed ahead!

Trend… The chart shows an ongoing recovery in manufacturing. It also shows that conditions are only ‘better’ and not ‘strong.’ Yet when we rank these individual PMIs against their historic results back to January 2022, the median rank across these 18 reporters is 90.8-percent, signaling that they have been higher less than 10% of the time back to 2022. Of course, 2022-2023 represented low points for manufacturing after Covid. There was a strong recovery from Covid and then the sucker-punch from the invasion of Ukraine by Russia. Nonetheless on that timeline recovery is still in progress and – so far- not even the Middle East war and other geopolitical turmoil, including a real donnybrook within NATO, has sidetracked it despite the impact on oil prices. That may not last, but it is the current situation.

A test for central banks With inflation rising central banks are being put to the test. They failed the post Covid test and waited too long to hike rates. We did get recovery but inflation, too. Will they do that again? Or will they hike rates sooner? Will they try not to make the same mistake and make, instead, a new mistake by getting too tight too soon? Markets simply do not know. But in the US and UK there are five years of missing monetary inflation targets and in other key countries the inflation targets also have been broadly missed even if headline inflation recently had dipped into the target range in the last few months or so. Central banks are facing a challenge after their last challenge was not met with success and after a relatively long period – a solid legacy- of missing on the promises they made to the public on inflation.

Solid PMI trends: The sequential, as well as the current, monthly data show how widespread change has been tilted in a positive direction. While conditions are broadly better, the current month’s median reading is only at a PMI value 52.4. So, manufacturing conditions are only slightly above breakeven (a PMI of 50) but they have been weak for so long that this is an exceptionally strong reading compared to the last four and half years of results.

Some examples: The weak manufacturing readings on the month by ranking are for Turkey, Russia, India, and Indonesia. However, these are own-PMI comparisons and India is one of the strongest readings in April on a cross-section basis (Compared to other countries in April, rather than to its own history) having the third strongest manufacturing reading in April. Malaysia, South Korea. Taiwan, and Japan each have the strongest readings (or nearly so) since January of 2022; as a result, Taiwan and Japan also rank one and two among 19-reporter readings in April. South Korea ranks sixth, But Malaysia has been so weak it still ranks only 11th despite a 99.2% high-low standing.

In Sum: The bottom line is that recovery has not been derailed. Yet… But this is only an April report. And, given time, this rebound could be untracked. It is only a rebound from the lows. So, the expansion is still at risk even with global labor markets still tight based on unemployment readings. Economic growth is a slippery slope; the trend is only your friend until it turns on you.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| May 20 2026
UK CPIH Eases Amid Global Oil Price Shock
CPI inflation in the UK eased sharply in April with the headline making no change at all and the core rising by only 0.1%. The headline is a marked departures from March when the UK CPI rose by 0.4% as the core put in another good month, rising 0.1%. Sequentially, UK inflation as measured by the CPIH has been relatively stable with a 3% growth rate over 12 months, a 3% annual rate over three-months, and a gain of 2.9% annualized over six-months; it's about as steady as you can get. The core (CPH excluding energy, food, alcohol, and tobacco) rises 2.9% over 12 months, eases to a 2.7% annual rate over six-months, then rises at a 2% annual rate over three-months.

Low inflation amid a global surge in oil prices The core is showing significant temperance and sequential improvement. Meanwhile, globally oil prices are flaring sharply, and most countries are seeing inflation rates rise. An energy cap in the UK is holding energy costs down and helping to keep the headline rate of inflation low. However, the cap can only work its magic for so long, eventually persisting strength in oil prices are going to show through into the headline index.

Acceleration tendencies abate In April, 50% of the categories of the CPI H showed acceleration compared to March; in March only 41% had accelerated compared to February; in February only 41% had accelerated compared to January. On a broad basis, inflation acceleration has been substantially neutralized or controlled. Sequential calculations show that over three-months acceleration has occurred in 50% of the categories, over six-months and 12-months, however, acceleration has occurred in only 33% of the categories, indicating that there has been a relatively long-lived environment of inflation temperance.

Still Too high However, inflation in the UK remains relatively high. The HICP measure, which is comparable to the measures used on the continent by the European Central Bank, has a 69th-percentile standing when ranked on data back to 2000. The CPIH has a 75.1-percentile standing and the CPIH-core has an 81.5 percentile standing. These are based on year-over-year percent changes and the two inflation gauges.

Inflation rankings tell us that inflation in the UK is still relatively high compared to how it has performed over the last 25 years. However, what's most important is inflation relative to the target of 2%. At 3% the inflation rate is too high and at 2.9% the core inflation rate is too-high as well. However, we see the shorter-term inflation rates particularly for the core have come down. The core rate over three-months has even reached the 2% mark, which is both encouraging and surprising. The UK economy has been performing poorly. The Bank of England will certainly be making its next monetary policy decision based on the performance of inflation with some assessment and how the trend is faring as well as with reference to economic performance which has been marginal. We will have to see how the BOE looks at the effect of the energy cap. At the same time there's a great deal of political turmoil in the UK to pair with difficult global geopolitical conditions
by:Robert Brusca
|in:Economy in Brief
Japan| May 19 2026
Japan GDP Outperforms Expectations
Japan’s GDP rose 2.1% annualized in 2026-Q1. The gain beat expectations for the quarter. The 2.1% rise was the largest gain since a 2.7% rise in 2024-Q3. However, it still leaves the year-on-year gain for GDP at 0.4%, the same as for 2025-Q4. And these are the weakest growth rates since Q1 and Q2 of 2024 when Japan’s GDP was declining.

Private consumption in 2026-Q1 rose by 1.1% quarterly at an annualized rate, its strongest gain in a year. Still, the year-on-year rise in private consumption slowed to 1% from 1.4% in 2025 Q4. Growth in private consumption on a year-on-year basis is the weakest it has been since 2024-Q4.

Despite some signs of GDP/Consumption stirring, the quarterly performance is not enough to boost the year-on-year growth rates to a position of strength, let alone firmness. Japan has simply been struggling for a while. And now with inflation bulging the BoJ has been super careful to move rates exceptionally slowly so that real interest rates in Japan remain exceptionally low (negative, still) and the prospect of rate normalization in Japan still seems to be a distant dream.

New PM Sanae Takaichi called her snap election and improved her grip on government and is still looking to stimulate the economy, but Japan’s fiscal position is now so precarious that even the usual incantation that Japan owns most of its debt to itself (its own residents) has not been reassuring. Japan has become wary of is debt-to-GDP ratio. The time for a fiscal surge has passed and there is talk instead of a new industrialization policy to try to stimulate the economy within the realm of current spending trends by offering improved incentives for growth.

Capital formation in GDP grew by 2.1% in 2026-Q1, a down shift for 2025-Q4, but capital spending is in a period of some volatility. The year-on-year gains show a step up in Q1 spending to a pace of 1.5% from 1.2% in the previous quarter. The five-year growth rate for capital spending is only 0.8% per year. Still there is not much here to build economic revival on.

Plant and equipment spending has weakened in Q1, showing an annualized Q/Q gain of 1.1% and that compares to five-year annualized growth of 1.8%. Year-on-year plant and equipment growth is at 2.8%.

Spending on housing turned sharply higher in Q4 with a smaller continued gain Q/Q in 2026-Q1. Still, after some considerable weakness quarterly, the year-on-year gain in housing spending in Japan in 2026-Q1 is -3.1% marking the third quarter in a row of declining spending on housing year-over-year.

Net exports in Japan turned sharply higher in 2026-Q1 and year-on-year the change in the GDP-net exports balance swung from negative to positive. The annual improvement in the net export position is still only half of what it had been over the last five years. Export growth spiked while import growth stepped up in 2025-Q1. Exports and imports over the past year both growth more slowly than their 5-year averages.

Domestic demand picked up a bit Q/Q in 2026, but the year-on-year growth slipped to 0.3% compared to a gain of 1.2% in the previous quarter.

Japanese officials are engaged in active market talk to try to restrain further slippage in the yen. Markets buzz with rumors of intervention that has not happened for over a month. Japan’s decision on interest rate is also caught up in its concerns about the yen. Meanwhile, as Japan imports all its fuel and rising energy prices are a concern in Japan. Yet the concern is about the future more than anything else since Japan tends to sign long-dated energy contracts and likely has locked up its oil price costs for this year. Still, the ongoing pressure has put conditions in doubt for the year ahead.

On balance Japan growth in 2026-Q1 was somewhat better than expected but it has done nothing to assuage concerns about the way forward. Ongoing inflation and a reticence to hike rates to address inflation continue to stalk the policy outlook as PM Takaichi looks for a way out of Japan’s weak growth trap.
by:Robert Brusca
|in:Economy in Brief
Turkey| May 18 2026
Confidence in Turkey Advances
Confidence for Turkey in April improved rising by 1.5% month-to-month to an index value of 96.42. Services and retail confidence both rose on the month as confidence in Construction fell by a sharp 3.6%, partly reversing an even sharper gain form a month ago.

The sequential performance of confidence in Turkey finds overall, services and retail sector confidence accelerating. Construction confidence is stronger over 3-months than over 12-months but its six-month gain shows slowing. Performance is still getting settled and the service and retail sector readings are still lower on balance over 12-months, even as they show acceleration and growth in train. Turky is a work in progress.

The individual sector standings of the confidence metrics by sector are surprisingly similar and cluster around the 20-percentile mark. Overall confidence at 22.7% has the strongest reading while the weakest sector reading is 17.4-percent and it finds construction and services in a tie for the lowest index rank standing.

The table also ranks confidence by growth rates, comparing growth over the past year across the sector readings. The growth sectors have relatively strong reading that the sector index standings. That is an admission that conditions currently have, when compared back to 2012, ranked weaker than the level of economic conditions (as proxied by confidence, of course) evaluated over the same period. It is evidence that some improvement in conditions (perceived improvement) is underway. The growth rate rankings stretch from the 32nd percentile to the 53rd percentile- all the growth standings exceed the index standings.

The growth in construction at a 53.5-perntiel standing is above its median growth rate since January 2012. Overall confidence still has a growth rate below its median at a 41.9 percentile standing; the shortfall is significant but not severe. Services and retail are more significant laggard with growth rate standings in their respective 32nd- and 33rd-percentiles – historically, reading that are higher about two-thirds of the time on the timeline back to early 2012.

Turkey continues to experience high inflation at 33% over the last year, a small deceleration from the month before. With global energy price pressures rising, Turkey’s central bank has recently lifted its outlook for inflation hear as well. The economy grew about 3.6% this year; it is on track for about 3% growth. Confidence readings suggest some ambivalence to these conditions. By this time, the population has gotten used to the high inflation. But growth has not stepped up significantly. That could be the key driver for improved expectations and confidence. But it is not yet a reality. Turkey is still, affected, of course, by the war-time conditions in Iran that is right on its border.
by:Robert Brusca
|in:Economy in Brief
Canada| May 15 2026
Canadian Industry Perks Up
Industrial orders in Canada are back on an expansion path with orders growing 4.7% in March on top of a 6.9% gain in February. These statistics chronicle Canadian orders digging out from a hole they fell into early in 2026. Now the data show emerging sequential growth in Canadian orders, which are advancing 3.6% over 12 months at a 14.9% annual rate over six-months, and a 26.7% annual rate over three-months. Still, on the chart that plots the year-over-year growth rates these recent accelerated rates of growth appear as mere recoveries from what had been earlier weakness. It remains to be seen how much acceleration the Canadian economy will actually undergo.

Unfilled orders expanded in March for the second month in a row, growing 2.4% after growing 1.4% in February once again following the recovery theme.

Manufacturing shipments grew by 3% in March after growing 3.4% in February and after dropping sharply in January - again echoing the recovery theme. Durable goods show two months of increases with the March increase weak after a very strong rise in February. Motor vehicle output recovered very strongly in February, after falling at a 37.1% annual rate in January; motor vehicle output is up by 15% in March, a hefty growth rate but short of what was posted in February. Once again, we see an echo of the theme of recovery. However, shipments of durable goods excluding motor vehicles are less robust, after dropping 1.8% in January output rose by 3.8% in February and has fallen back, dropping by 1.1% in March, a small fly in the ointment of this recovery theme for Canada. And nondurable goods shipments saw a small increase in January of 0.2%, a flat February, and now an extremely strong, 5.6% month-to-month gain in March.

Canada's sequential growth rates are on the verge of showing broad acceleration. Orders clearly do accelerate from 12-months to six-months to three-months. Unfilled orders, however, accelerate over six-months compared to 12-months and then take a small step back over three-months to an annualized growth rate of 13.4% - a very small step back that is still far above the 12-month growth pace. Manufacturing shipments, too, show a small flaw in acceleration as the 6-month pace dips ever so slightly before logging a very strong 3-month pace. Durable goods then are an exception to the acceleration theme; however, nondurable goods get back on board with the strong acceleration move.

Rankings The rank standings for these categories are based on annual growth rates and comparison with data extend back approximately 25 years. Orders have a 58-percentile standing, unfilled orders have a 57-percentile standing, while manufacturing shipments have a 62-percentile standing. Shipments for durable goods durables excluding motor vehicles and from motor vehicles as a stand-alone have rankings in their 30th- to 40th-percentiles, below their historic medians. (medians occur at a ranking of 50). However, nondurables have an extremely strong 80.5 percentile standing. The data are consistent, the recovery and progress with the exception that durable goods shipments that are not fully on board and languish below their historic median results. Ranking the data over six-month growth rates improves the results somewhat and brings motor vehicles on board for a growth rate that is above its historic median.

Signs of improvement Goods-based industry shows signs of picking up even in March as oil prices were rising and industry was facing greater challenges. The US industrial production report for April, similarly, shows acceleration across the board, even as the economy continued to deal with the difficulties of rising oil prices. Of course, the Canadian US economies are closely linked; we would expect the manufacturing sectors to be performing with some degree of synchronization. However, there's no reason to be complacent about the outlook. Oil prices have continued to rise, the challenge to consumers is strong and across all countries. In the US special tax cuts enacted last year, which went into effect earlier this year, have helped to deliver extra money to consumers that have helped them deal with the oil price shock. But these were funds that were supposed to help stimulate the economy to higher growth and were planned by the President to help him with midterm elections coming later in the year. The US economy still has to deal with those realities with sharply divided political reality as well.

Outlook The US acrimony with Canada has taken a back burner for a while. And as that has happened the Canadian economy has come back to life. However, Canada still has some problems with inflation although it also has a broader inflation target to accommodate some flexibility. And the prospect for more inflation because of global oil prices continues to hang in the balance. The results for March are encouraging but certainly not definitive. Canada has mounted a nice recovery after a period of difficulty earlier in the year but it's still hard to say what comes next.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| May 14 2026
UK Q1 GDP Growth Steps Up
UK GDP grew by 2.5% in 2026-Q1. GDP growth quarterly was last this strong in 2024-Q2 and last stronger in 2024-Q1. This is the strongest quarterly growth in about two years. Private consumption surged in 2026-Q1, rising at a 2.4% annual rate. Capital formation and housing each backed off in the last two quarters. This is the opposite form the US where investment is strongly pushing growth ahead.

On the international side of the ledger, UK exports rose at a 0.4% annualized rate in the quarter while imports rose by a strong 2.6% annual rate, still, viewed on its own, domestic demand rose at a 3.2% annual rate.

Domestic demand growth has picked up to over 1% at 1.5% on a year-over-year basis. That is a good development. However, it is still a weak showing. Over the last 26 years domestic demand’s Year-on-year gain ranks at its 30th-percentiel; it has been weaker than this only about 30% of the time. But over the last nearly four-years the 1.5% gain is just below its median. This gives some indication of how weak growth has been in the post-Covid period. The UK was still in a post Brexit environment, when it had to deal with Covid, the invasion of Ukraine, and now the Middle East. At the same time, it has had a considerable amount of its own political turmoil and still does.

The chart above shows the snake crawl of GDP that continues to depict growth in the EMU area. That is a continuing weak environment- one of the UK’s important export markets. Europe’s fixation on social welfare spending and the need to tax to pay for it has robbed the economy of its dynamism. Still, both the UK and the Euro-Area continue to have lingering inflation issues. And both show current inflation in an upswing.

Central bankers' inflation and growth Central banks are playing a waiting game, the best that they can. Major money center country central banks have been consistently overshooting their inflation targets since Covid. And despite excess inflation banks have been reluctant to hike rates and have instead pursued a strategy of persisting slow rate reduction. It has been a curious period in which central banks have kept their inflation target goals but simply have been content to miss their targets in the short run and promise to thit them in the long run. This is clearly a policy of only temporary usefulness because it is bound to blow up, the longer inflation fails to be controlled at its targeted pace. For now, UK interest rates remain higher than in Europe, closer to the level in the US and with a monetary policy committee that seems determined to stop the overshoot as oil prices flare. We’ll see if the BOE MPC members are really ready to pull the trigger on higher rates as UK GDP growth looks firmer.
by:Robert Brusca
|in:Economy in Brief
Europe| May 13 2026
Manufacturing IP in EMU Slogs Ahead
Industrial production in the European monetary area in March rose by 0.2%. Manufacturing output rose by 0.4%, marking two-months in a row of output increases. Output is still falling overall and in manufacturing over three months. Over three-months total manufacturing output excluding construction falls 2.7% annualized, over 6-months, it falls at a 0.4% annual rate, and over three-months the pace of decline steps back up again to -1.2% at an annual rate. The declines in manufacturing are more or less along the same lines.

Sectors Output of consumer goods fell in March, driven by a decline in the output of nondurable goods that fell 4.5% month-to-month. Intermediate goods output rose by 0.9% in the month, increasing for the second month in a row. Capital goods output rose 1.1% after rising 0.8% in February.

Sequential growth However sequential growth rates find headline growth negative over 12-months, six-months, and three-months- the same as for manufacturing. Consumer goods output declines at an accelerating pace dropping 11.6% over 12-months, at a 13.6% annual rate over six-months and at a 24.9% annual-rate over three-months. Those declines are led by reduction in consumer nondurables output. Intermediate goods output is mostly weak over the horizon, falling by 1.5% over 12-months and by 0.9% over 3 months annualized. The exception is capital goods sector where output rises by 2.2% over 12 months and accelerates to 4.6% over 6-months but then tails back, trimming growth to a 1.2% annual rate over three-months.

Country Performance On a country basis declines occur in only two early-reporting members; those are Malta and Germany in March. Over three months output declines in the monetary area occurs in Ireland and Luxembourg and in Germany- with increases elsewhere. Output declines over 12-months, six-months, and three-months in the monetary area only for Germany, Luxembourg, and Ireland. There are consistent output increases in the monetary union in Austria, France, Finland, Italy, Greece, and Portugal. For most countries, increasing output is the rule despite the weak headlines, indicating that large economies are faring worse than smaller economies.

Q1 Growth In the completed first quarter, we have manufacturing output falling by 1.8% at an annual rate and overall output falling at a 1.9% annual rate. Output declines in the quarter and in all major sectors. As for country reporters output falls in the quarter for Austria, Germany, Luxembourg, and Ireland.

Growth rate rankings So, the percentile queue standings presented in the right-hand column are rankings of industrial production growth rates over 12-months. Compared to recent history, overall output has a 17-percentile standing which is relatively weak, in the lower one-fifth of its ranked results over the period (back to 2006). Only capital goods output at 52.5% has a standing above the 50% level which places it above its median result for the period. Among reporting countries seven have percentile standings above 50%, above their respective medians. The countries where output does not grow at a pace in excess of its median are Germany, Luxembourg, Malta, and Ireland.

On balance the smaller countries seem to be faring better in the European monetary union. The last two months have been relatively good months for output across the union; however, January had been so weak that the two months have not been able to recover from the weakness experienced in January. And the March data hardly reflect the hardships that are going to be visiting these economies because of the rise in oil prices and concerns about the situation in Iran and the strait of Hormuz. The future is unlikely to get better.
by:Robert Brusca
|in:Economy in Brief
Europe| May 07 2026
EMU Retail Sales Recede in April
Retail sales in the European monetary area fell in March by 0.1%, continuing a streak of declines in retail sales volumes since the beginning of 2026. Motor vehicle sales, however, as a separate category, showed recovery in registrations and sales from January to February to March.

Among six early reporting monetary union and other European countries, Germany and Norway showed sales declines in March, while Denmark, the Netherlands, the United Kingdom, and Sweden recorded month to month increases. However, these March data belie the weakness in February, when sales declined month-to-month in all six of these areas. Prior to that, January sales had increased month-to-month in all these countries except Germany; Germany posted a 1.1% decline in retail sales in January.

Sequential trends Sequential trends for these countries show that retail sales in Germany have been slipping more rapidly, falling 2% over 12 months, at a 3.9% annual rate of decline over six months, and at an accelerated 13.1% annual rate of decline over three months. Norway also has seen increasing weakness in retail sales, rising by 0.9% over 12 months, gaining at only a 0.4% annual rate over six months, and then falling at a 1.2% annual rate over three months. However, Denmark, the Netherlands, the U.K., and Sweden each show retail sales accelerating from their 12-month growth rate to their six-month growth rate and to their three-month growth rate. Only the Netherlands is an EMU member country. These data pool together monetary union and non-monetary union countries.

Looking at the headline for the monetary union, we see sales are clearly slipping and decelerating, with total sales volume up 1.1% over 12 months, up at a 0.2% annual rate over six months, and then falling at a 1.9% annual rate over three months. Sales in the monetary union are weak and getting weaker.

In the quarter-to-date (the now-completed first quarter), monetary union sales fell by 0.5% at an annual rate. Among the other countries in the table, only Germany—the largest economy in the monetary union—shows a quarterly decline at a 4.3% annual rate. All the other reporters in the table show increases, ranging from 0.1% at an annual rate in Norway to a 6.3% annual rate in the United Kingdom.

Looking at the sales gains back to January 2020, before COVID, in the euro area total retail sales volume is up by 6.3% over that broad period. U.K. sales volumes are actually lower by 0.6% over that same span. Germany, the largest euro area economy, shows a 2% increase since January 2020, implying a very slow gain for retail sales over that period. The strongest gains since January 2020 are logged by Denmark, with a 12% gain, followed by the Netherlands with a 6.4% gain and Sweden with a 5.6% gain. Since we're looking at a broad six-year period, on that time horizon these are all relatively weak numbers, with the exception of Denmark.

Activity in the monetary union has been weak, with the service sector having been quite weak during the period since COVID ended—especially on the back of the invasion of Ukraine by Russia. Recently, manufacturing and goods sector data have shown a little bit of life, even as service sector data continue to be very touch and go. We see that again in this retail sales report. Now oil prices are jumping, and there is a new ‘hot’ situation in the Middle East; the Strait of Hormuz is showing either impeded or shuttered traffic conditions. The outlook remains very uncertain. Consumer confidence measures continue to show consumers as somewhat off balance and concerned about circumstances and the outlook. This means we'll continue to watch all these trends closely. In the meantime, these retail sales trends indicate caution on the part of consumers as to their willingness to spend—even though they appear to have opened their pocketbooks to spend on vehicles in recent months and even sequentially. In context, the rebound in auto sales still leaves total vehicle registrations 5% lower than they were in January 2020—six years ago. There is nothing there to indicate that the consumer is out of the woods and back to normal.
by:Robert Brusca
|in:Economy in Brief
Global| May 04 2026
Global MFG PMIs Sweep Higher: Damn the Torpedoes!
You may recognize the excerpted headline quote as ‘borrowing’ from U.S. Admiral David Farragut. It is a famous quote from a U.S. Civil war battle in which he charged ahead in his ship regardless of the risk. This month the global manufacturing PMIs themselves are charging ahead regardless of the rise of inflation, the war in Ukraine, the war in Iran, the closure or impedance in the Strait of Hormuz, and the mucking up of oil and nonoil supply lines. Full speed ahead!

Trend... The chart shows an ongoing recovery in manufacturing. It also shows that conditions are only ‘better’ and not ‘strong.’ Yet when we rank these individual PMIs against their historic results back to January 2022, the median rank across these 18 reporters is 90.8%, signaling that they have been higher less than 10% of the time back to 2022. Of course, 2022-2023 represented low points for manufacturing after COVID. There was a strong recovery from COVID and then the sucker-punch from the invasion of Ukraine by Russia. Nonetheless, on that timeline, recovery is still in progress and—so far—not even the war in the Middle East and other geopolitical turmoil, including a real donnybrook within NATO, has sidetracked it, despite the impact on oil prices. That may not last, but it is the current situation.

A test for central banks With inflation rising, central banks are being put to the test. They failed the post-COVID test and waited too long to hike rates. We did get recovery but inflation, too. Will they do that again? Or will they hike rates sooner? Will they try not to make the same mistake and make, instead, a new mistake by getting too tight too soon? Markets simply do not know. But in the U.S. and U.K., there are five years of missing monetary inflation targets, and in other key countries the inflation targets also have been broadly missed, even if headline inflation recently had dipped into the target range in the last few months or so. Central banks are facing a challenge after their last challenge was not met with success and after a relatively long period—a solid legacy—of missing on the promises they made to the public on inflation.

Solid PMI trends: The sequential, as well as the current, monthly data show how widespread change has been tilted in a positive direction. While conditions are broadly better, the current month’s median reading is only at a PMI value of 52.4. So, manufacturing conditions are only slightly above breakeven (a PMI of 50), but they have been weak for so long that this is an exceptionally strong reading compared to the last four and half years of results.

Some examples: The weak manufacturing readings on the month by ranking are for Turkey, Russia, India, and Indonesia. However, these are own-PMI comparisons, and India is one of the strongest readings in April on a cross-section basis (compared to other countries in April, rather than to its own history) having the third strongest manufacturing reading in April. Malaysia, South Korea, Taiwan, and Japan each have the strongest readings (or nearly so) since January 2022; as a result, Taiwan and Japan also rank one and two among 19 reporter readings in April. South Korea ranks sixth. But Malaysia has been so weak; it still ranks only 11th despite a 99.2% high-low standing.

In Sum: The bottom line is that recovery has not been derailed—yet. But this is only an April report. Given time, this rebound could be untracked. It is only a rebound from the lows. So, the expansion is still at risk, even with global labor markets still tight based on unemployment readings. Economic growth is a slippery slope; the trend is only your friend until it turns on you.
by:Robert Brusca
|in:Economy in Brief
Europe| May 01 2026
GDP Remains Weak in EMU
GDP growth in Europe in the first quarter of 2026 continued to be weak. First-quarter annualized growth at 0.6% followed a fourth-quarter annualized growth rate at 0.8%. Year-over-year growth in the monetary union logged a 0.8% annual rate; that represents a slowdown from earlier quarters where the growth rates were generally above 1% and more on the order of 1.5% at an annual rate.

Early GDP reporters in EMU Among the 8 early reporters of GDP in the first quarter, in the table, only three posted growth pickups compared to the previous quarter. Those were Belgium, with a growth rate in the first quarter annualized at 0.8%, up from 0.2% in Q4 2025; Germany, where the growth rate picked up to 1.3% in the first quarter from 1.0% in Q4; and Ireland, with a dubious acceleration of growth to a -7.8% annualized rate, improving from -14.5% annualized in Q4.

Big country, small country The table also looks at growth divided into the four largest economies in the monetary union versus the rest of the monetary union. There we see a growth rate of 1% for the four largest economies, a slowdown from 1.3% in the fourth quarter. For the rest of the monetary union, the growth rate held at 0.5% in the first quarter, the same rate logged in the fourth quarter.

Median growth The median growth rate among these reporters was 0.6%, the same as for the weighted growth rate in the EMU, while the median in the fourth quarter was 1.5% compared to a weighted growth rate for the monetary union at 0.8%.

Ranking the growth rates vs. their own histories The ranking data on the far-right column rank growth in the first quarter on its year-over-year growth pace. On a historic profile, we see only three monetary union reporters with growth in the first quarter at a rate that exceeds median on data back to the 1990s. Those economies are Italy with a 52.2 percentile ranking, Spain with a 53.3 percentile ranking, and Portugal with a 65.2 percentile ranking. For the monetary union as a whole, the growth rate rank is 28.3%, placing it at a ranking between its lower 1/4 and lower 1/3. The median for the monetary union among these early reporting countries is a 32.6 percentile growth rate, and these compared to the United States where the growth rate has a 60.2 percentile standing.

Other data sources report that growth in the services sector has been extremely weak, while there actually has been some resilience in manufacturing. That is somewhat surprising given the Middle East War that affects the world trade and global supply chains. New disruptions because of war in the Middle East are a new fact of life. However, war itself sometimes is a stimulant to some forms of growth. These sector trends will be for us to watch, but for right now growth rates are not impressive and they're certainly not gaining momentum.
by:Robert Brusca
|in:Economy in Brief