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

Europe| Dec 02 2025
EMU Unemployment Holds Its Ground But There Is Erosion
Unemployment rate holds in October Unemployment in the European Monetary Union held at 6.4% in October. That's just a couple of ticks off its all-time low. Unemployment at 6% is also just a couple of ticks off its all-time low in the European Union, and unemployment in the EU also was unchanged in October from September.

A good October Conditions in Europe for unemployment remain extremely favorable although there are signs of pressure and the rate itself is slightly off of its all-time low. October, however, was a pretty good month for unemployment as the table gives us unemployment statistics for 12 monetary union members. Among those 12, only three had unemployment rates rise: Finland (from 9.6% to 10.3%), Belgium (from 6.3% to 6.4%), and Austria (from 5.6% to 5.8%). Outmatching the rising unemployment rates, we're falling unemployment rates in Italy, Luxembourg, Ireland, Greece, and Portugal. The raw number of unemployed in October in the EMU fell (while the raw number of unemployed rose slightly in the EU).

Not such good September and August results In September, month-to-month unemployment rates rose more broadly in seven countries while falling and only two countries. In August, unemployment rates rose in five countries while falling in only two countries. October was an unusually good month for the unemployment rate that fell much more broadly than rose across these 12 monetary union members. Also in August and September, the raw number of unemployed rose month-to-month in each month in both the EU and the EMU.

A more tempered sequential look Sequential changes in unemployment rates over three months, six months and 12 months show some backtracking and potentially unemployment unrest. Over three months unemployment rates rose in six countries and fell in only two countries. Over six months, the unemployment rates rose in eight countries and fell in four countries. Over 12 months unemployment rates rose in seven countries while falling in four countries. The number of unemployed rose period-to-period in each of these time segments in both the EU and the EMU. Sequentially, there has been more backtracking than there has been progress. But the unemployment rates are so low even holding the line is an exceptionally good performance.

Ranking the unemployment rates The ranking of the unemployment rate for the European Monetary Union as a whole is in its 5.8 percentile; it has been lower 5.8% of the time. The unemployment rate in the European Union has been lower about 7.4% of the time. Unemployment rates are above their respective medians (which means above a ranking of 50%) only in Austria, Finland, and Luxembourg among EMU members.

Inflation: still stubborn Just released data show some inflation stubbornness in the monetary union. Core inflation (Country level) continues to be stubborn above ECB target of 2%. We have core inflation data for some selected countries in the union, and we do not yet have core inflation measures for the monetary union as a whole.

Baltic dry goods index is on a run higher Still, there some good news in the offing; oil prices continue to slip which is good for the longer term outlook for inflation and the Baltic dry goods index is making a significant ongoing push higher; it's currently sitting at high the highest point we've seen in over a year. That should be a good sign for the outlook for manufacturing and for the goods sectors of these economies. It’s also good news for the development of unemployment rates. The Baltic dry goods index is an index of global shipping volume; its revival is a welcome event in the wake of the Trump tariffs.
by:Robert Brusca
|in:Economy in Brief
Global| Dec 01 2025
S&P MFG PMIs Remain Mixed
The S&P manufacturing PMIs for November show split results with 9 reporters showing improvement and 9 reporters showing deterioration. The median value among reporters in November is 49.0, exactly the same as its the three-month average, but it's a downtick from 49.5 in October. The split in terms of improving or deteriorating is 50/50 in November and that compares to 61.1% improving versus about 39% deteriorating in October. Both of these diffusion readings are a tremendous step up from September when only 11% of the reporters improved month-to-month.

Sequentially, there's hardly any change at all and none worth speaking about. All of the values for three-months, six-months, and 12-months are either 49.0 or 49.1. Now compared to 12 months ago shows a diffusion of 55.6, indicating relatively more improvement than deterioration. For six-months versus 12-months, diffusion is at 66.7, indicating about 2/3 are improving and only one-third deteriorating. However, over three-months compared to six-months, the split on diffusion is at 50%, a wholly neutral value.

The queue standings that rank the November observations on data back to January 2021 show above 50% readings for eight of the 18 reporters in the table. Above their 50% mark (which means above their medians) are the euro area, Germany, the United States, the United Kingdom, India, Indonesia, Malaysia, and Vietnam. The global manufacturing results from the JP Morgan index which employs weighting is much higher at 68.4 percentile and compares to an unweighted Asian average of 54.7%, and the total average at 45.8%. Neither of the two average statistics employ weighting.

Assessing the change in manufacturing from January 2021 across the 18 reporters, only four have manufacturing indexes that are higher than they were at that time; those reporters are Mexico, Indonesia, Malaysia, and Vietnam.
by:Robert Brusca
|in:Economy in Brief
France| Nov 25 2025
French Household Confidence Erodes Slightly in November
The INSEE survey of household confidence in France eased in November after having seen some rebound in October. The chart shows that household confidence has generally been giving back ground over the past year; that contrasts to the business climate indicator that has been stable during this period, with a very slight uptrend.

Household confidence has a 29.3 percentile (rank) standing on data back to 2001, marking the level of confidence as a lower one-third phenomenon for France in November.

Living standards over the past 12 months had been relatively stable, posting a value of -74 in November, much the same as what we see over the earlier five months and translating into a ranked standing in its lower 15-percentile, a relatively weak result. The outlook for living standards over the next 12 months is at a diffusion value of -55; however, it is still at a relatively weak 15-percentile standing. The prospects for unemployment had diminished slightly over the last five months, but currently the reading has a 62.6 percentile standing. That's a rank standing above the 50th percentile, marking it as a concern about unemployment that's slightly higher than the median for the period.

Price developments in November yield a diffusion rating of -9, very little change compared to the previous four months and with the rank standing at its 37th percentile, basically suggesting that there was not much concern about inflation over the past 12 months. The next 12-month reading is at -32 in November, unchanged from October and slightly weaker than the previous three months; however, the standing is at its 49th percentile, which is essentially at its median.

The favorability to save, at a reading of 45 in November, had stepped up slightly over the past five months, while the ability to save over the next 12 months had also crept up very slightly. Each of these metrics has a very high ranked percentile standing in the 99th percentile. Favorability to save responses are generally strongly correlated with unfavourability to spend and we see that here again with the favorability to make major purchases at a -30 reading in November and having generally slipped from the previous five months and having fallen to a percentile standing in its 16.3 percentile, quite a weak situation.

The financial situation over the past 12 months had largely been unchanged at the level of the November reading; it has a 64.3 percentile standing, above its historic median. However, for the next 12 months the financial situation, while also having improved compared to its recent history, has a percentile standing only in its 43.5 percentile.

The INSEE household confidence survey for November remains weak and continues to show soft spots. There is little evidence of firming across the components, and the trend behavior is that this index has been slipping at a slow pace over about the last year. None of that seems to be changed as of November 2025.
by:Robert Brusca
|in:Economy in Brief
Germany| Nov 24 2025
IFO Expectations Drop in Germany
Germany’s IFO climate gauge fell in November logging a -16.5 net diffusion score after -14.6 in October. The overall index for climate ranks in its 18.4 percentile on data back to the early 1990s. Among the five key sectors that the table illuminates, only one, construction, has a ranking above 50% which puts it over its median for the period. Manufacturing is at a 13.6 percentile standing, retailing is at a 14.1 percentile standing, services are at a 16.8 percentile standing, and wholesaling is at a 26.9 percentile standing - all of these quite weak.

More on Climate.... On a month-to-month basis, climate eased lower for the headline, manufacturing, construction, and retailing. There were month-to-month improvements in wholesaling, as it improved slightly to -19.4 in November from -20.5 in October and then services where a ‘zero’ reading in October crept up to a 0.5 positive reading in November.

Current Conditions The current conditions metric for the IFO improved slightly to -5 in November from -5.6 in October. Improvements were pretty much across the board in all sectors with the exception of retailing that fell relatively sharply to a -20.9 reading in November from -16.6 in October. Once again, the percentile standings for these five sectors - this time for current conditions - show all of them below their historic median except for construction at a 62.1 percentile standing. The overall current index has a 10.4 percentile standing

Expectations...not so great expectations... Expectations in this report weakened across the board with the headline moving to -10 in November from -8 in October. Manufacturing deteriorated particularly sharply falling to -7.1 in November from -2 in October. All sectors weakened, most of them with more modest month-to-month deterioration. The queue ranked standings for the all-sector reading is at the 21.9 percentile mark. Most of the sectors have a 20 to mid-20 percentile standing; the exceptions are construction with a 30.7 percentile standing and retailing with the very weak 7.9 percentile standing

Summing up The weakening in the IFO index this month was unexpected. While current conditions were broadly getting slightly better, expectations took a significant step back in the month, raising questions about how the German economy is doing and what sorts of readings we're going to see next month afterward given this unexpected turn of events for the worse.
by:Robert Brusca
|in:Economy in Brief
Global| Nov 21 2025
S&P PMI Gauges are Mixed but Improving
The month-to-month changes in the S&P PMI indices are mixed in November with slightly more of them weakening than strengthening but still quite a significant mix and the European monetary union the composite index weakened, dragged lower by a weakening in manufacturing while the services index improved. The services in EMU improved for three months in a row but manufacturing deteriorated for two months in a row before sinking in November.

Germany and France separately report early from the monetary union. Germany shows weakening across the board for all three sectors while France shows strengthening in the composite and in services only showing a weakening in manufacturing.

The United Kingdom shows weakening the composite and in services with strengthening in manufacturing. That pattern is repeated in Australia.

Japan shows improvement in all three sectors and shows consecutive improvement only in the composite index.

India shows weakening in the composite and in manufacturing with only services strengthening in November after all three sectors weakened in October.

The US, after seeing all three sectors weaken in September, then strengthen in October, shows the stronger composite and stronger services in November juxtaposed to a weaker manufacturing reading.

The monthly data create a great deal of turbulence and create a picture that's hard to pin down in terms of trends and generalities. However, the three-month, six-month, and 12-month average data provide a much more solid and stronger framework. That sequence is not only stronger but it's much more solid in terms of the message that it sends. The period averages which are calculated only on completed data (so these are data through October) show only three-sectors (out of 24) weakening that's France for the composite, and France for services, and Japan for manufacturing; the other six countries or areas all show sector readings improve for the three-month average compared to the six-month average. Six-month averages compared to 12-month averages show only a weakening in Australia for manufacturing. 12-month averages compared to 12-months ago show weakening in only 8 separate sectors involving five different regions. Year-over-year comparisons show the UK is weaker in all sectors, Japan is weaker for the composite and for services, the European Monetary Union, Germany, and France are weaker on their 12-month average only for the services sector.

Percentile standing The queue percentile standings for the eight countries in the table reveal readings below the 50% mark for only three of 24 sectors those 3 sectors are the UK composite, UK services, and manufacturing in Japan. All the rest have standings above the 50% mark which puts them above their historic medians on data back to January of 2021.

The standing data are substantially improved from what we're seeing just a few months ago there is a general improvement in the global economy as is clear from the average data although the monthly data are still quite touch and go.

Summing up The November report is disappointing because prior to its release there had been relatively solid trends in place. It's now going to be important to keep an eye on the monthly data to see if this improving trend remains or if we've entered a period where signals are going to get mixed again. There's some evidence of some scattered weaknesses, particularly in the UK economy, that's performing poorly, there, the central bank is likely to deliver another rate reduction soon. The situation in the European monetary union is much more in flux. The US is also in ‘no-man’s-land’ on jobs and inflation, but in the United States the difference is that GDP growth has been strong and appears to continue to be strong on the back of investment an artificial intelligence and in data centers. The US continues to report out weak job growth, essentially because of special factors related to structural demographic conditions, a closed border, deportations, legacy effects from a closed government, (which have now been reversed) and what may be ongoing weakness caused by a transition from firms that are phasing in their artificial intelligence investment. Every economy has a story. The US story may stave off rate cuts through year-end.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Nov 20 2025
CBI Industrial Survey Seeing Ongoing Weakness and Deterioration Ahead
The survey of the industrial sector by the Confederation of British Industry (CBI) shows ongoing weakness for orders and export orders as stocks build slightly more aggressively. The build out in stocks when orders and expectations for volume are falling is not a good sign and suggests that the inventory buildup may be involuntary and that may be setting the stage for weaker economic performance ahead.

Total orders in November notch a reading of -37 on the net diffusion reading, about the same as the -38 logged in October. Both of those are significantly weaker than September's -27 and compare to a six-month and 12-month average around minus 32 and minus 33.

Export orders are improved in November but still quite weak at a reading of -31 compared to -46 in October. At -31 the November net reading for exports is similar to the six- and 12-month averages which are -32 and -33, respectively.

Stocks of finished goods in November have moved up to +16 from +7 in October they were higher than the 12-month average and the higher than the six-and 12-month averages, the latter 2 hovering around values of 10 and 12 compared to this month's value of 16.

An accelerating weakening appears, looking ahead for output volume over the next three months. The reading drops to -30 in November from -19 in October and -14 in September; the 12-month average stands at -13 with the six-month average of -15. This is a severe deterioration

Average prices over the next three months, however, as expected output volume deteriorates sharply in November is expected to see less pressure. The November value for prices in 3-months at a reading of +7 compares to score if +16 in October. At +7 the price expectations are well below the 12-month average which has been 18 and the six-month average which checks in at +13. With economic cooling expected, cooling in price pressures are expected to accompany that slow down.

Standings by the numbers: The queue standings of the November variables are uniformly weak. The exception is stocks of finished goods which have a 74-percentile standing displaying strength in that measure while orders and expected output volume are weak as a bad sign. Average prices, while losing some momentum in November, still have a standing at their 53.7 percentile, slightly above their median- so these are still somewhat heated price readings although the pressure is off compared to October and compared to 6-month and 12-month standards. Total orders have a 9-percentile standing; export orders have a 26-percentile standing and the expectation for output volume over the next three months has only a 2.8 percentile standing.

The activity and expected activity portions of the survey remain very weak. Their results support the idea that the economy may need more help from the Bank of England despite some ongoing inflation overshoot. As mentioned in yesterday's write up the inflation metrics are beginning to converge toward values that the Bank of England will find more acceptable although the current levels of variables measuring inflation are still too high. The momentum is in the right direction and with economic weakness in train, it's hard to imagine the Bank of England holding the line or standing on ceremony because inflation is still above target. The economy is beginning to emit signs that are a more significant outcry for help.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Nov 19 2025
UK Inflation Drifts Lower as Unemployment Rises
UK inflation gives the BOE a greenlight on rate cuts. UK inflation is still excessive at 3.8% over 12-months for the CPI-H and its core metric. But over six-months both of those drop; the headline drops to a pace of 2.9% and the Core drops to 3.0%. Over three-months inflation drops even lower to a headline pace of 2.3% and a care pace of 2.7%. Both are still above the 2% target but look much less dangerous.

Stauch inflation fighters still will not like the results. But with the unemployment rate a year ago at 4.2% and now up to 5% (as of August) and with a one-half-of-one percentage point rise in the unemployment rate in the last six-months it becomes hard to hold the line on monetary policy. The BOE’s rate changes have mirrored those of the Fed in the US, but with the official; unemployment rate at 4% now and short-term inflation readings around 2 ½ percent and unemployment rising it would be hard for the central bank, especially given the turbulent UK political scene, to squeeze the economy further. IN the UK inflation is deflation whereas in the US inflation is stuck, possibly rising and facing the potential of pressure form tariffs.

Inflation diffusion checks in below 50% (the level that marks equal tendencies for inflation to accelerate or decelerate across broad categories) for 12-months, 6-months, and 3-months. Over recent months, month-to-month inflation has been contained in terms of broad categories with two of three months showing monthly diffusion below 50%.

It is hard to make any optimistic case for economic activity and if UK activity is going to slow, it is much easier to make a case for inflation containment to progress further. While the more up to date claimant count unemployment rate has been steady, the lagging overall rate has a clear uptrend that has to be viewed as worrisome.

Like the Fed I would surely like to see more progress on inflation in the UK and I do not view current circumstances as optimal to cut rates. But the situation is simply slippery. And monetary policy is made in the real world under conditions or uncertainty. And real-world conditions surely pave the way for some continued rate cutting unless data and trends shift.

In October, the CPI and Core rose by just 0.2% month-to-month with inflation rising in six of ten major categories month-to-month and after seeing only one category accelerate month –to- month in September and a split of five/five in August.

Still, make no mistake about it, inflation is still too high. The question of the bet by the central bank will be on the future. When UK inflation is ranked on Year-over-year monthly observations back to early 2000, inflation is below its median year-to-year rise in only two of ten categories and ranked on the same period the freshest unemployment rate has been lower about 46% of the time marking the current (rising) rate of unemployment as slightly below its median for this period. But the claimant rate that has stabilized at a lower level is nonetheless higher on this period, less than 30% of the time, which means the stability in the claimant rate is not as reassuring as it seems. It would appear that policy dialogue in the UK is about to shift.
by:Robert Brusca
|in:Economy in Brief
Canada| Nov 18 2025
Canadian Housing Starts Show Erosion
Canadian growth has been in its own trajectory with some solid consumer spending in gear and some slight slowing in GDP growth. Housing has begun to show some wear and tear in this environment even as mortgage rates have remained well off peak and have begun to stabilize around the 5% mark for 5-year mortgage financing.

Canada has been cutting its policy target rate faster than the Fed has been reducing the Fed funds rate. Canada’s unemployment rate has hovered above the rate for the US and it has been rising; rising - not quickly - but with a bit more purpose than in the US. This may have encouraged the Bank of Canada to cut rates more aggressively with inflation fluctuating is the desired range set by the back of Canada.

Canadian housing starts show the ‘signature slowing’ during Covid and the strong post-Covid recovery that actually has boosts starts well above the average it had maintained for the five-year previous to Covid. Even not with new episode of weakness in train Housing starts are above the pre-Covid average in Canada- and facing higher financing rates than before.

Canada, like the US, is going through some difficult fiscal times. In addition, there is an ongoing Trump-Carney spat that is a heavy overlay on the bilateral relations so important to both economies. Canadian PM Mark Carney just survived a confidence vote over his budget. The Carney budget aims to pump funds into the Canadian provinces to boost infrastructure and house-building. In Canada builders also face development fees that some want altered but the offer of reducing them has not been put on the table. Not surprisingly Canada is under some of the same pressure as the US for the government to act and supply answers for the housing shortage that has emerged. Carney’s platform on which he was elected had made some substantial promises and they still are not coming to fruition.

Covid seems to have upset a number of apple carts many of them related to housing. Prior to Covid housing demand had not been so vigorous. But Covid may have triggered something that reminded people how important housing can be especially in a crisis when you become house-bound. In the wake of Covid US and Canadian housing demand strengthened. And since the bank of Canada made the same policy mistake as the Fed driving interest rates to the brink of the zero bound during Covid it also created a period of super low mortgage rates which now has the effect of trapping people in their own homes- a form of "golden-handcuffs" that keep people in a house because of cheap financing. While mortgage rates are nearly 150bp below their post Covid peaks, they are still more than 100bps above their pre-Covid averages. The housing market remains under duress.
by:Robert Brusca
|in:Economy in Brief
Canada| Nov 17 2025
Canadian CPI Trends Show Little Change
Inflation around the world appears to be rather similarly behaved Canada is a very close trading partner of the United States and so we might expect that there would be a little more connection between the prices in Canada and in the US and possibly we can learn something about the upcoming US CPI report by looking at the just-released Canadian CPI report.

Canadian inflation is highly correlated with inflation in the US. The US and Canadian CPI's have a correlation of 0.97 on annual percentage changes. Canada's CPIx measure has a correlation with the US headline CPI of 0.94 and the Canadian core inflation rate has the correlation with US core inflation rate of 0.94. All of these measured against year over year inflation. Clearly with a good deal of trade and a long common border prices in the US and Canada have a chance to mix it up and affect one another and create some degree of homogeneity. However, none of that is really perfect. Despite the strong correlation between headline inflation and core inflation between the US and Canada, Canada's core CPI and the US core CPI have a correlation based on month-to-month changes of less than 0.2 Using an R-squared metric.

Well, it might be somewhat comforting to look at Canadian inflation, and I think it's giving some guidance for the US. That would only be true over a long period of time, but it probably doesn't provide much guidance for us in terms of what we can expect from the month-to-month changes.

While Canada's correlation with US inflation is high it's correlation with inflation in Japan it's only 0.33: only 1/3 of the variants in these two indicators is in common. In terms of the Euro-Area the correlation is less than -0.1, which tells us the correlation is negative and extremely small and of course not statistically significant.

The Canadian CPIx measure shows inflation pretty flat at around 2.6% over 3 months and over 12 months. Canada's 6-mo CPI measure accelerates from 2.2% over 12-months to a 2.6% annual rate over 6-months to a 3% pace over three months. US inflation on these horizons essentially replicates what's presented by Canada's CPI X based on existing data. However, the R-squared association between the three month annualized percent change in the Canadian CPI versus the US CPI shows that they share about half of the same variation with an R-squared of about 0.5. And on this comparison Canada’s and US’ recent inflation trends appear to be highly similar.

The Bank of Canada looks at inflation using several different metrics and it also looks at inflation relative to a range unlike the US, leading to a much more measured discussion of what inflation is and how it's performing.

The decision by the Fed in the US to stick with a simple point forecast at this point is something that probably cannot be changed, at least not until the central bank is able to show that it can hit that target consistently. Even so, the Fed has not showed a great appetite for trying to express inflation in terms of a target band. However, when the Fed changed its framework agreement it did adopt something called flexible average inflation targeting (FAIT) which never really described for us or explained what it was and it has a set that approach aside I think to the pleasure of most economists.

There continues to be buzzing and differences of opinion over what the inflation target should be in the US. However, the international standard has been set at 2 per cent and at this point adopting a number different than that doesn't seem to make a lot of sense. Adopting 2% with some flexibility might make some sense but, of course, the Fed is already doing that as it's allowed a 4 1/2-year overshoot of its inflation target as it continues to cut rates. This decision, however, does not amount to a change in the Fed’s inflation targeting but rather to a set of decisions that appears to be losing the Federal Reserve credibility. Meanwhile, the Bank of Canada, operating with the range and having had much the same kind of access that the Fed has had in hitting and missing its inflation target midpoint, has emerged from this period with its credibility largely intact.
by:Robert Brusca
|in:Economy in Brief
Europe| Nov 14 2025
EMU GDP Ticks High a Bit Faster
The European Monetary Union released an uneventful GDP report with GDP rising by 0.2% quarter-to-quarter in 2025 Q3 compared to an increase of 0.1% quarter-to-quarter in the second quarter of 2015.

At an annual rate, overall GDP rises at a 0.9% pace in the third quarter, up from 0.5% in the second quarter; that acceleration masks a deceleration in the year-over-year growth as Q3 growth is at 1.4% year-over-year compared to an increase of 1.5% year-over-year in the second quarter.

The table shows eight early-reporting monetary union members and among these eight only two of them show GDP slowing in the third quarter compared to the second quarter on quarter-to-quarter changes. Ireland slows to -0.4% after gaining by 0.9% in the second quarter. Spain’s annual rate in the third quarter falls to 2.6% compared to a 3% pace in the second quarter.

Looking at year-over-year growth rates, there are decelerations that are much more common. In fact, there are accelerations in only three of the countries: Belgium, France, and Portugal. Belgium’s GDP growth in the third quarter moves up to 1.1% from 1% in the second quarter, growth in France is at 0.9% in the third quarter compared to 0.7% in the second, while Portugal logs an increase of 2.4% compared to 1.8% year-over-year gain in the second quarter.

Looking at growth in terms of the four largest EMU economies versus the rest, large economy growth notched 0.9% in the third quarter in terms of quarter-to-quarter changes compared to 0.4% in the second quarter. Euro area growth for the large economies was unchanged 0.8% in the third quarter; in fact, it has grown by 0.8% year-over-year in the first quarter, second quarter, and third quarter of 2025. The rest of the monetary union shows growth accelerating in the third quarter to 1.1% from 0.7% in the second quarter. However, the year-over-year growth rate for the rest of the monetary union drops down to 2.8% in the third quarter from 3.4% in the second quarter and that compares to 3.8% in the first quarter.

The median growth rate, which is the growth rate among these eight countries and is unweighted, rises to 1.4% in the third quarter from 1% in the second quarter while the year-over-year growth rate has a median of 1.1% compared to 1.3% in the second quarter.

The quarter-to-quarter growth rates favor slightly the smaller countries in terms of the growth rate being logged although both large and small countries show a stepup in growth from the second quarter to the third quarter. Year-over-year growth rates also show much stronger growth in the rest of the monetary union compared to the four largest EMU economies on a consistent basis in fact for each of the four quarterly year-over-year growth rates in the table.

The rankings of growth give us some idea why we face these statistics, since three of the four largest monetary union economies log growth rates that are below their respective median growth rates since the late 1990s. Only three countries have growth rates above their medians on this timeline; those are Ireland, Portugal, and Spain. Germany, the largest monetary union economy, has a 30.4 percentile ranking for its year-on-year growth rate, France has a 28.3 percentile ranking, and Italy has a 35.9 percentile ranking.

The numbers posted today are in line with preliminary results and what markets had expected. Growth in the euro area continues to be positive and to move ahead. The signs in this report are that there's more progress than regress quarter-to-quarter although the progress remains slow, it's also relatively broad. This is a positive report but not a glowing report.
by:Robert Brusca
|in:Economy in Brief
Europe| Nov 13 2025
EMU Industrial Output Advances in September
Industrial output in the European Monetary Union in September advanced by 0.2% after falling by 1.1% in August and rising by 0.7% in July. Output of consumer goods fell in the month with overall consumer goods output falling by 2.5% and a 0.5% reduction in consumer durables output and a 2.6% reduction in the output of consumer nondurable goods. However, intermediate goods output grew by 0.3% and capital goods output rose by 0.3% in September. Output fell broadly across each of these sectors and subsectors in August but then it rose in all of them in July. Output metrics have been through a bit of turbulence over the last three months.

Sequential Growth Performance Sequential calculations showing annual rates of growth over 12 months, six months and three months reveal some weakening in output and then some diminishing of that trend. Overall output rises by 1.4% over 12 months. Then output falls at a 4.9% annual rate over six months and that reduction in its cut to -0.8% over three months. Manufacturing follows that same pattern. Consumer goods output also follows that pattern, but durables and nondurables output of consumer goods are on the same wavelength with the only difference that consumer durables output also falls over 12 months. Intermediate goods output rises by 0.3% over 12 months, falls at a 3.3% rate over six months, and then rises at a 2.3% annual rate over three months. Capital goods output is up by 1.5% over 12 months, falls at a 2.9% annual rate for six months, and then is flat over three months. The sector results show a good deal of chaos in terms of trying to pin down a trend.

Quarter-to-Date Quarter-to-date that now show results for the full third quarter on this preliminary note, reveal output eroding by 0.1% at an annual rate; manufacturing output falling at a 0.4% annual rate, with an increase in consumer goods at a 1% annual rate, created totally by an increase of 1.5% consumer nondurable goods output. Intermediate goods and capital goods both show output declines in the just-ended quarter.

Rankings/Standings The percentile standings show that consumer durable goods output is below its median at a 39.9 percentile standing. Intermediate and capital goods output also are both below their medians (below 50%) but a 45-percentile standing for intermediate goods and a 46.8 percentile standing for capital goods prevail. However, these are not tremendously weak values; they're just slightly below their median rates of increase since the median rate of increase occurs at a ranking of 50%.

Country Performance for Manufacturing We're revisiting the country data much of which has already been released. Out of 13 monetary union members in the table only 5 show output declines in September and none of the four largest economies log a decline in output in September. However, seven countries had logged declines in August, and six had logged declines in July.

Countries Sequentially Turning to sequential data annual growth rates over 12 months, six months, and three months, there are declines in six countries over three months, in seven countries over six months but in only four countries over 12 months. The country's logging output declines over 12 months include Germany, Finland, Luxembourg, and Malta.

Quarter-to-Date On a quarter-to-date to date basis, there are five countries that log output declines in the third quarter. They are Germany, Finland, Portugal, Luxembourg, and Malta.

Country Standings The queue percentile standings show five countries with output increasing at a pace below its median pace since 2007. The average of the median standings across countries is a reading of 63.8% and that's the same as the standing for output in the whole euro area. While the performance of output is still somewhat irregular, conditions appear to be solidifying and risks to the downside appear to be diminishing. Conditions remain somewhat touch and go. The European Central Bank is in a waiting mode; it has not turned off its easing cycle. In the United States, it's unclear whether the Fed is going to continue the easing cycle or not. The government shutdown in the U.S. makes U.S. policy options more complicated although the outlook for growth in the United States in 2026 with new fiscal provisions in force and a rebound out of the government shutdown appear to be quite good. However, globally inflation is still largely excessive and central banks are definitely running out of room to become more stimulative.
by:Robert Brusca
|in:Economy in Brief
Global| Nov 12 2025
Global Money Supplies Deliver Growth-Rate Plateau
Global money supply growth boomed during COVID. Then growth ‘busted,’ decelerating sharply with the United States, the United Kingdom, and the European Monetary Union all showing monetary contraction to some degree throughout 2023. The only country to buck this trend was Japan which had a more modest boost in money supply during COVID and then more modest growth rates that decelerated and continued to gravitate toward near zero growth, until recently, when Japanese money supply started to accelerate very slightly.

Euro Area Recent trends show nominal money growth in the euro area decelerating slightly from a 2.5% growth rate over 12 months to growth rates around 2% or a bit lower over three months and six months. Monetary union private credit has also decelerated from a growth rate of 2.4% over 12 months to 1.7% over six months and to a 1.3% annual rate over three-months.

United States, United Kingdom, and Japan Nominal money supply growth in the U.S. remains fairly steady, growing 4.5% over 12 months and an annual rate of 5 to 5.4% over three months and six months. The U.K. nominal money supply growth is 3.5% over 12 months, 2.8% at an annual rate over six months and 3.6% at an annual rate over three months. Japan's M2 plus CDs has been stepping up its growth from 1.6% over 12 months to a 2% pace over six months to 4% at an annual rate over three months. Nominal money supply growth is mostly fluctuating between steady and stronger across these monetary center countries.

Real balances in EMU Real money balances, however, are looking significantly weaker. In the European monetary Union, real M2 grows 0.3% over 12 months and then its growth rate slips to -0.6% at an annual rate over both three months and six months. Private credit in the euro area rises by 0.1% over 12 months, declines by 0.5% at an annual rate over six months, and declines at a 1.3% annual rate over three months. Real credit is weakening.

More real balances In the U.S., real money supply growth is fluctuating, growing at 1.4% over 12 months, stepping up to 2.3% over six months and back to a 1.4% annual rate over three months. U.K. real money balances are simply shrinking at a -0.6% annual rate over 12 months and a -0.7% annual rate over three months. In Japan, real money balances are actually accelerating; real money growth is -1.3% over 12 months, which rises to plus 0.4% over six months with an annual rate of 2.9% at an annual rate over three months.
by:Robert Brusca
|in:Economy in Brief