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| Jun 04 2026
Retail Sales in Europe Continue to Struggle
Retail sales in the euro area declined in volume terms in April, falling 0.4% on the month after rising 0.8% in March and falling 0.5% in February. Food and beverage volume recovered to post an expansion after two monthly declines.

Sales trends slip: However, the headline for retail volume growth shows that there has been steady slippage, with growth over 12 months weaker than it was over the previous 12 months, growth over six months at a weaker pace than it was over 12 months, and growth over three months posting an outright decline compared to a gain over six months. The highlighted red background in the table shows this string of continuous slowing that marks decelerating retail spending in the euro area as of April. In the quarter to date, retail sales volumes are declining at a 0.2% annual rate—a very slight contraction but a net reduction in sales volume, nonetheless, to start the second quarter.

Contrarian strength in vehicle demand: Motor vehicle registrations pulled back in April after some strong gains in earlier months. Motor vehicle registrations are accelerating as the growth rate rises from 12 months to six months to three months; growth actually explodes over three months, rising at a 52.4% annualized rate. With this strength, naturally, motor vehicle registrations are logging strong growth at the beginning of this new quarter, rising at a 33.6% annual rate.

Despite the strength in motor vehicle registrations, registrations are still a lot lower in comparison to January 2020. They have averaged a decline of 1.2% per year over this period. Since January 2020, just before COVID struck, retail sales in the euro area have risen by 6.7%, implying an average annual growth rate of 1% per year. This has generally been a lethargic period for retail sales.

Sales trends by country Looking at the individual countries in the table, we chronicle developments for EMU members Germany and the Netherlands, EU member Denmark, and Northern European countries Norway and Sweden, plus former EU member the United Kingdom. We see that all of these countries have had a long period of weak growth going back to January 2020. Among these countries, only Denmark and the Netherlands have averaged retail volume growth of over 1% for this date-span; Denmark averages 1.5% per year, and the Netherlands averages 1.3%. Sweden and Norway’s trends average 0.8% and 0.7% growth per year back to January 2020. Germany posted a compounded annual increase of only 0.6% annually, while in the U.K., in the wake of the problems that COVID and Brexit created, saw its retail sales volumes decline annually by 0.4%, marking a 2.2 percentage point decline in retail sales since January 2020. It has been a weak environment for retailing.

Recent sales performance: Up-to-date observations for April show declines in retail sales volume in Germany, Denmark, and the U.K., with flat sales in Sweden. Norway logs an increase of 0.3% month-to-month, and the Netherlands logs an increase of 1.6% month-to-month. The sequential data, looking at sales over 12 months to six months to three months, largely points to a continuation of this period of lethargic sales. Germany, the U.K., and Norway each are posting a sequential deceleration, as the rate of sales slows over progressively shorter time periods. Denmark and the Netherlands have somewhat erratic performance on retail sales, with no clear trends. Sweden stands alone as the only country with retail sales clearly accelerating, rising 4.2% at an annual rate over 12 months, at a 4.4% annual rate over six months, and at a 5.8% annual rate over three months.

Challenging outlook The retail environment remains challenging in Europe. Oil prices are rising; the European Central Bank is expected to take steps to deal with excessive inflation and rising oil prices with at least one rate hike. The war in Ukraine remains hot; the war in the Middle East may be cooling down, but the Strait of Hormuz is still not open for business. The global economy continues to face significant challenges.
by:Robert Brusca
|in:Economy in Brief
Global| Jun 03 2026
Composite PMIs Ride Weakening Trend
With 25 countries in the mix, it can be hard to draw a simple summary statement about the condition of the global economy judging from the S&P composite PMIs. The manufacturing sector has recently been doing better, while the services sector is still in an extreme bout of lethargy globally. Fewer countries issue specific services sector indexes than issue manufacturing or composite PMI results.

The services sector tends to dominate the composite readings, so what we see this month is a great deal of weakness in the S&P composites, reflecting service sector weakness. The 18 early reporting manufacturing reporters registered a median queue ranking in their 67.7 percentile; that compared to a median ranking of 26.2% for this group of 25. However, the two groups are not the same. If we recalculate for the 10 common reporters, we get a median manufacturing ranking of 61.5% compared to a composite median ranking of 23.8%; for those same ten, the services sector median ranking was in its 16.9 percentile. That is a ranking that seems to flirt with recession potentially. To that point, in May 2026, eleven of twenty-five composite PMIs registered diffusion values below 50, indicating contraction.

In May, among the 25 reporting composite PMI reporters, 44% of them were weakening month-to-month, which is less than half but still a very large proportion and not particularly good news; this followed 48% weakening in April and 84% weakening in March. So, with the heating up of war in the Middle East and the closure of the Strait of Hormuz, service sector conditions have gotten a lot worse even though it might have seemed logical that it would be the manufacturing sector that would suffer. The PMI data do not bear out that expectation. In March, the global PMI data improved only in Spain, Sweden, Zambia, and Ghana—thin gruel for good news.

On a monthly basis, there is sequential weakening in progress in the European Monetary Union, France, Ireland, and Japan.

If we look at the broader sequential data over three months, six months, and 12 months, we see that conditions have gotten progressively weaker, with 82.6% of these reporters weaker over three months, 78.3% weaker over six months, and 43.5% weaker over 12 months. There is progressive weakening on this broader timeline in the United States, Spain, India, Saudi Arabia, and the United Arab Emirates. There's sequential improvement indicated only in Singapore.

The queue percentile standing evaluations at the far right of the table rank and therefore order the data across these reporters, on observations back to January 2021. On that relatively long timeline, only 5 reporters have current readings above their respective 4.5-year. medians. Those are Singapore, China, Nigeria, India, and Sweden. On this timeline, the French composite is at its absolute lowest ranking of the period. The European Monetary Union reading is in its lower 10th percentile, with the four largest monetary union economies each having a ranking below their respective 35th percentiles. The U.S. ranking is in its 26th percentile, roughly just above the bottom quarter of its raked results. The U.K. is in its lower 18th percentile. Japan is near its median, at its 49th percentile; however, none of these readings are reassuring. For example, Japan’s near 50th percentile ranking compares to a weaker U.S. ranking, but the U.S. composite PMI diffusion value at 51.5 is stronger than Japan’s at 51.1. But the U.S. value is weaker relative to its history back to January 2021. Japan’s higher ranking actually simply refers to performance that is still quite weak, but nearly as good as it has done over the past 4.5 years. It is important to keep the relative (ranking) and the absolute (diffusion value) comparisons separate. Diffusion values are not presented in the table—except for a few averages/medians—because putting those data in table for the countries is prohibited by the data provider.

The weakness is broad-based. While the manufacturing sectors have been digging out, the services sectors have continued to worsen during the improvement in manufacturing—which I take to be a bad sign. Manufacturing tends to be the more sensitive signal, and we often think of manufacturing showing a turnaround in the economy before it becomes a process involving the entire economy. But in this case, it doesn't look like the manufacturing revival is progressing across the various economies. Certainly, one reason could be rising oil prices and the fact that oil prices eventually become an input to just about every single business—because if it's not a direct input, it's an indirect input through its impact on transportation costs.

Broad but mild slippage If we look at the average and median PMI values, we can see that while there has been broad slippage, the slippage has been quite slow. The average reading for this group over 12 months is the PMI at 52; that has slipped to 50.8 over three months and sits at 50.8 in May. The median for the group is 51.8 over 12 months; it has slipped to 50.6 over three months and registers 50.2 in May. The bad news is more that these economies have lingered at very weak readings than that there is technical slippage in progress. Over 12 months, there were only four of 25 reporters with PMIs below 50. Over three months, that figure has mushroomed to 9, and as of May, there are 11 reporters with PMIs below 50, indicating economic contraction. These are poor trends and clearly ones to watch. Weakness has been driven by the services sector where we get fewer observations and data, and this is a sharp counterpoint to some of the manufacturing data that have been improving.
by:Robert Brusca
|in:Economy in Brief
Europe| Jun 02 2026
EMU Inflation Accelerates
The chart shows European Monetary Union inflation using seasonally adjusted data to produce 12-month, 6-month, and 3-month compounded annual rates of change for the core, yielding a clear picture of acceleration. The core rate is supposed to be relatively less affected when energy prices spurt. However, in this case, the increase in energy prices is so large that it is being passed on across commodity classes because of its impact on transportation costs, an effect that is ubiquitous.

Every product must be brought to market, and apart from that, products have different intrinsic exposures to energy as a direct or indirect input, either because it's a chemical, it uses plastic, or it's more insulated as a service. However, the impact on transportation costs is broad.

The table shows year-over-year inflation monthly, and there you can see that the headline is moving up more than the core. However, the core rate is moving up, and at 2.5%, it's far enough above the ECB's 2% target for it to be considered too strong. The headline rate in May at 3.2% is considerably higher and stronger, but it's also more affected by energy prices and therefore it may represent something the ECB could view with a bit more flexibility. However, the strength in the core is going to cause the ECB more problems.

Along the bottom of the table, we look at the details on inflation to see the incidence of acceleration of inflation over three-month and six-month periods to give trends a bit of breathing room to develop. For both the headline and the core, the breadth of inflation is rising. Headline and core measures both are rising in nearly two-thirds of the categories (62.5%).

We take a broader look to see where inflation ranks historically on data back to 2001. The headline measure has inflation at the 88.5 percentile, while core is at the 86.2 percentile. Both demonstrate considerable strength in May. Looking at the details by category by stepping back one month to April, we find that one of the highest standings for inflation is in transportation, which is no surprise given what's going on with energy prices. Communications products, however, have a high inflation at their 98.7 percentile. Personal care products have a standing on their 92nd percentile, another high standing. Inflation for recreation and culture has a relatively low standing in its 36th percentile, and house furniture and maintenance prices have only a 16.4 percentile standing.

There are differences in inflation rates and inflation pass-throughs from energy effects. But the dispersion of inflation is only about a top one-third phenomenon—high but not extreme. That suggests that the impact on inflation, while significant, is not—at least not yet—dominant. We'll be watching indicators like this to get some idea of how impactful and broad the effects of inflation from the Middle East conflict are and how they will develop. For now, the impact is substantial and still seems to be in full swing.
by:Robert Brusca
|in:Economy in Brief
Global| Jun 01 2026
Manufacturing PMIs Show Continued Resilience
Manufacturing PMIs continue to show an uptrend in place. The median estimate for the 18 early reporting countries of manufacturing data is 51.6. It shows expansion at a relatively weak pace, with a slight month-to-month backtracking in the overall median reading for the 18 countries. That median fell by 0.8 points month-to-month. However, the broader readings over three months, six months, and 12 months each are above 50, and each of them shows an increase compared to the previous period. So, while there was a minor monthly setback, the overall reading shows conditions are broadly improving, and output is advancing, in manufacturing. Over a longer time horizon, changes over three months, six months and 12 months are on an improving path.

Diffusion statistics that show that proportion of readings that are getting better reveal a split of 50/50 month-to-month. However, over three months, 66.7% of reporters are improving; over six months compared to 12 months, 72.2% are improving; and over 12 months compared to a year ago, 77.8% are improving. Momentum remains in an upward direction over various horizons even in the face of month-to-month volatility in readings.

The bottom of the table shows grouped results for different batches of countries. The developed country group—the U.S., the U.K., the European Monetary Union, Canada, and Japan—show an improvement over 12 months, six months, and three months. The Asian average shows the same conditions holds with continued improvements in train. However, the BRIC countries show more stasis, with their PMI readings not clearly advancing and hovering just short of an average value of 51 on their pooled diffusion gauge.

The ranked percentile standings have made a great deal of progress over recent months. Currently, the median standing of the full-period medians for the 18 countries in the table shows an 84.7 percentile standing, which is quite impressive. Only five countries—Russia, India, Brazil, Indonesia, and Mexico—have ranked standings below their medians on data back to 2022.

The PMIs remain relatively upbeat this month despite the ongoing war in Ukraine and in the Middle East, and the constraint on traffic through the Strait of Hormuz. The manufacturing sector is showing surprising resiliency in the face of these hurdles for data up to date through May.
by:Robert Brusca
|in:Economy in Brief
Global| May 29 2026
EMU Early Inflation Readings Rise in Large Countries
In the post-COVID cycle, inflation in Italy hit its low point early in 2023 and then again late in 2024. However, for the other large monetary union economies, France, for example, inflation hit its low point early in 2026 at a pace of about 1.1%. Germany, the traditional low-inflation country in the monetary union, has had more difficult times with inflation post-COVID. For this reason, the low point for German inflation came early in 2026 (and in mid-2025 at 1.9%). For France and Italy, headline inflation began escalating very early in 2026. For Germany, the escalation was a little later, and the spiky part of inflation was blunted on the early side; inflation has actually tipped slightly lower now, in May. However, despite these differences in timing, the overpowering sense is that inflation in the large countries has turned higher early in the year, and the European Central Bank will have some decisions to make.

Month-to-month price changes In May, inflation decelerated in Germany, with the month-to-month observation going unchanged. Headline prices in Spain rose by 0.2%, in France by 0.3%, and in Italy by 0.4%. German prices excluding energy have been making steady gains for the last several months, rising by 0.2% in May; Italian core prices rose by 0.4% after being flat in April and declining sharply in March; in Spain, the core CPI rose by 0.2% for the second month in a row.

The monthly statistics on inflation from the headlines and core rates for these countries are not off-the-charts or particularly troublesome. However, when put in context in terms of 3-month, 6-month, and 12-month inflation rates, the headlines and the cores trace more disturbing patterns.

Sequential trends in the HICPs Headline inflation for these countries shows over three months that inflation has a rate excessive relative to the ECB's target for the European Monetary Union as a whole. There are no country-by-country targets from the ECB, only an objective for the union-wide result. German inflation over three months is the weakest, as it logs a 4% annual rate. Italian inflation is the strongest, rising at an 8.6% annual rate. Over six months, inflation is excessive in all four of these countries. The weakest gain is in Germany at 2.4% at an annual rate; the strongest is in Italy at a 5.9% annual rate. Over 12 months, inflation is also excessive across the board relative to the ECB's overall monetary union target of 2%. The weakest gain in 12-month inflation is Germany at 2.6%, while the strongest is Spain at 3.6%. Additionally, inflation is accelerating from 12-months to six-months to three-months in both France and Italy. Although inflation is not accelerating in that three-period sequence for Germany and Spain, it is not far from doing so. All of these are going to be uncomfortable metrics for the European Central Bank to navigate. These are the headline rates for the large EMU countries, and they are clearly being pushed up by energy prices on the constriction of traffic through the Strait of Hormuz.

Core and ex-energy inflation trends Three of the four largest EMU economies give us either core inflation or inflation excluding energy metrics. On that basis, two of three economies, Germany and Spain, show excessive inflation over three months annualized, at 2.7% for Germany and 3.4%, for Spain. We compare them to the target set by the ECB for the European Union overall. Italy is the exception, with core inflation falling 0.4% at an annual rate over three months. Over six months, Germany, Italy, and Spain all have core inflation rates at or above 2%. Italy's rate comes in at 2%, Germany's ex-energy rate is at 2.2% annualized, while Spain’s CPI core checks in at 3% inflation. Over 12 months, inflation in Germany excluding energy is 2.3%, in Spain the CPI core runs 2.9%, while in Italy, inflation is still restrained for the core measure at a 1.8% annual rate.

Headline inflation and rising energy prices clearly are generating pressures such that even the core conditions aren't looking good. Core inflation rates above 3%, as we see in Spain across nearly all three timelines, are disturbing to the monetary authority. German inflation is moderate at 2.2% over six months and 2.3% over 12 months, but then it rises to a more disturbing 2.7% over three months. So far, Italian inflation is not an issue, at 1.8% over 12 months, 2% over six months, and even declining at a 0.4% annual rate over three months.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| May 28 2026
U.K. CBI Industrial Quarterly Survey Weakens
The Confederation of British Industry (CBI) shows business optimism falling sharply in Q2 2026, joined by a drop in export optimism. Expectations for capital goods spending excluding buildings improved slightly on the quarter, with the index reading rising to -38 from -44. Expectations for capital spending excluding equipment fell significantly to -36 in the second quarter from -22 in the first quarter. The two capital spending measures each have rankings below the 20th percentile; for capital spending excluding buildings, the figure is extremely weak.

The number employed over the last three months shows a slight decline to -19 from -16; however looking ahead to the next three months, the decline repeats, falling to -26 from -18 in the first quarter. The rankings for these two metrics are both in the low 30th percentiles.

New order volume for three months ago and three months ahead remain weak, with the three-month ago reading stuck at -21 and the three-month-ahead reading falling from -12 in the first quarter to -31 in the second quarter. The rankings for these two metrics are each at the 15th percentile or lower.

The volume of domestic orders for three months ago edged slightly lower, to -25 from -23; however for three months ahead it weakens more sharply to -32 from -17. Both of these metrics have rankings at the 15th percentile or weaker.

The volume for foreign orders from three months ago improved to -4 from -12. The volume for three months ahead has weakened only slightly, from +1 in the first quarter to -2 in the second quarter. The three-month-ago reading has a 35th percentile ranking, while the three-month-ahead ranking is at its 47th percentile. The foreign sector appears to be carrying some stimulus to the U.K. economy.

The volume of output from three months ago was slightly weaker in the second quarter, while the volume of output for three months ahead is expected to weaken from a -14 reading in Q1 to -20 in Q2. Both metrics have a lower 10th percentile standing.

The average cost of output three months ago rose sharply to an index reading of in the second quarter 54 from 33 in the first quarter. Looking ahead to the next three months, another ratchet up is in progress, to a reading of 79 from 50 in the first quarter. These are suddenly extremely strong readings, with three-months-ago reading at a 78th percentile standing and the three-month-ahead reading at essentially a 90th percentile standing.

The average price for domestic orders three months ago has gone up from an index value of 2 in the first quarter to 17 in the second quarter, while the average price for domestic orders for three months ahead edged up to a reading of +32 from +29 in the first quarter. The three-month-ago reading has a 53rd percentile standing, while the three-month-ahead reading has an 89th percentile standing. Price expectations are hot.

The average price on foreign orders for three months ago rose from -4 in the first quarter to +15 in the second quarter, logging a 49th percentile standing, pretty close to its historic median. The average price for foreign output for three months ahead moved down to +19 from +23 in the first quarter and has a very strong 91.8 percentile standing. The Q/Q pressure eased a bit but remains intense.
by:Robert Brusca
|in:Economy in Brief
France| May 27 2026
INSEE: French Manufacturing Rebounds Amid Weakness
The French manufacturing climate index improved in May, rising to 102.3 after climbing to 100.4 in April from 99.4 in March.

Despite the improvement, the standing of the climate index is only at its 50.4 percentile, leaving it just slightly above its historic median on data back to 2001. Industry climate now is still slightly lower than it was in January 2020, just before COVID hit.

The survey components tell a mixed story about prospects for industry in France. Manufacturing production expectations improved slightly in May, moving to -17.0 from -17.4 in April; however, both readings were sharply weaker than the value in March. The standing of production expectations in May is at its 25.4 percentile, marking it as just a hair above its lower quartile when ranked on data back to 2001. This is a weak and uninspiring showing.

The recent trend of production is much more upbeat, rising to 14.3 in May from 3.6 in April. It also shows a sharp improvement compared to a year ago, when the value was 3.7. Its standing is significantly above its historic mean, and the ranking for this May observation is at its 82nd percentile—a solid showing. It is the strongest response in the survey among demand and activity variables. But can that trend hold?

The personal likely trend, in which survey respondents respond to prospects for their own firms and industries, shows much less ebullience, with the May reading of 4.4 and a steadily diminishing trend from March to April to May. The personal likely trend is still stronger than a year ago, when it was -3.1, although it is significantly below its historic mean, with a ranking at its 28th percentile. It is a reading that is nearly completely decoupled from the recent trend responses in this same survey.

Orders and demand in May improved to -14.1 from -15 in April; in April, the index had improved from -18.2 in March. There is a similar trend and improvement for foreign orders and demand as well. Both overall and foreign demand are improved compared to a year ago; both are stronger than their historic means, and each of the series has a ranking in its 61st percentile—above their respective historic medians with some margin, enough to say the responses look firm. Yet, there is not enough to say they look strong. Both readings are still below their levels in January 2020, before COVID struck.

The INSEE survey also includes two observations on prices: the own-likely price trend and the manufacturing price trend. Both have been moving up sharply from March to April to May; both are significantly above their year-ago levels and relatively strong compared to their historic means. Both series also have high percentile rankings, with the own-likely price trend at a 90.2 percentile ranking and the manufacturing price level at an 88.5 percentile ranking. Both are also substantially above their levels of January in 2020, before COVID struck.
by:Robert Brusca
|in:Economy in Brief
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