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| Sep 16 2024
EMU Trade Surplus Erodes
The European Monetary Union trade surplus moved lower in July. At €15.46 billion, it is down from €17.02 billion in June. The erosion was due to a larger deficit on nonmanufacturing trade as the manufacturing balance actually improved to €39.1 billion from €37.9 billion. However, on nonmanufacturing trade, the deficit swung to -€23.7 billion from -€20.9 billion.

The chart provides the hint that the move back to surplus may have passed its peak as there is a string of surpluses having swept up to higher levels and now engaged in the process of headed for lower levels.

The trend for exports shows overall exports slowing then declining steadily from a growth rate of 2.5% over 12 months to 0.6% over six months to -8.1% over three months. This transition is driven by the growth rates of manufacturing as well as nonmanufacturing exports; both of which transition from positive growth rates over 12 months to negative growth rates over three months.

On the import side, the patterns are inconsistent although they culminate in weakness over three months. Total imports fall 2.5% year-over-year, advance at an 11.4% annual rate over six months, and then decline at a 3.2% annual rate over three months. Manufacturing imports follow this same progression; however, for nonmanufacturers, growth is at 3.2% over 12 months, that expands to a 15% annual rate over six months, and then collapses to -3.4% over three months. Import trends are chaotic.

Turning to three European countries two of them the largest countries in the European Monetary Union, we find Germany has exports declining progressively and imports doing the same. Both German export and import flows are slowing consistently and declining with imports falling faster than exports. For France, exports are accelerating from 4.3% over 12 months to 5.3% at an annual rate over six months to nearly 12% at an annual rate over three months. French imports, in contrast, don't have a clear trend but they are declining on each of those horizons. The U.K. shows declines in exports and imports year-over-year that are relatively balanced and again declines over six months that are relatively balanced for the two flows. But over three months, U.K. exports advance at an 11.3% annual rate while imports are basically unchanged at a 0.1% annual rate.

Export trends for Finland, Portugal, and Belgium find cross trends, with Finland showing a decline in exports of 17.3% at an annual rate over three months. But Portugal shows exports accelerating from 12-months, to six-months, to three-months, culminating in a 45.9% annual rate pace over three months. Belgium shows an export decline over 12 months that gives way to increases over three months and six months but again without a clear trend.

The trends for the three-month growth rates are positive for the EMU aggregates and for the exports of Finland, Portugal, and Belgium. But trends are negative for exports as well as imports for Germany France and the U.K. Over 12 months, most of the calculations show declines in trade flows, underpinning again the notion that manufacturing has been weak in Europe. That weakness lends itself to weakness in both the exports and imports; European weakness in manufacturing naturally leads to knock-on weakness in trade. That is not surprising. It has been the strength in the services sector that has tended to keep growth alive, especially in Europe.
by:Robert Brusca
|in:Economy in Brief
Europe| Sep 13 2024
EMU IP Takes a Small Step Backward
In the wake of European Central Bank rate cuts, the European Monetary Union reports a 0.3% reduction in industrial production in July. Industrial production in the euro area shows a decline of 2.2% in output over 12 months; the rate of decline improves slightly to -1.6% when annualized over six months but then has a severe setback over three months as it falls at a 4.8% annual rate. You simply cannot put positive spin on this month’s report or on the trend. The best we can is that year-on-year trends are not worsening; several are potentially encouraging if they persevere.

The patterns in manufacturing are the same but manufacturing output declines at an 8.2% annual rate over three months, a much larger decline than for output overall. Sectors show some upbeat trends for consumer goods, as output is up by 1.6% over 12 months and then continues to advance at a 4.3% annual rate over six months and over 12 months. The increase in overall consumer goods output is underpinned by a steady acceleration in nondurable goods output and held back by declines in durable goods output over 12 months, six months and three months. Intermediate goods output faces a decelerating profile, with output falling 3% over 12 months, falling at a 3.7% annual rate over six months, and falling at a 6% annual rate over three months. The capital goods progression is not as steadily deteriorating, but it's a chilling development since output falls by 5.1% over 12 months, then that decline is trimmed to -2.9% at an annual rate over 6six months, but it comes back to show a 12.6% decline at an annual rate over three months. That's not a clean steady deterioration but the 12.6% pace of decline over three months is certainly chilling.

In the quarter-to-date, which is at this point a nascent calculation, one-month into the new quarter. Overall output falls at a 3.9% annual rate, manufacturing output falls at a 5.3% annual rate, consumer goods output is rising strongly pushed ahead by nondurable goods output. But apart from that, there are ongoing sharp declines in consumer durables output, the output of intermediate goods, and then the output of capital goods.

The performance of industrial output in July supports the decision by the ECB to cut rates even though that decision occurs with inflation over the top of its target and still accelerating. However, the factory sector has been weak for quite some time and the services sector has been strong enough to provide overall expansion for the economy. The goods sector is simply the weakest part of the economy and so it's going to seem like it is in support of any policy step taken to offset weakness.

EMU member countries The country level data for 13 of the earliest European Monetary Union members shows output declines in July in six of these reporters. In June, there were output declines in five of them; in May, there were output declines in seven of them.

Sequential calculations show that output has been increasing less broadly from 12-months to 6-months to 3-months. Over 12 months about two-thirds of the reporting countries showed output increases/ Over six months that fell back to 50% of them, whereas over three months only a little better than one-third of the reporting monetary union members are indicating accelerating output. In addition to that, over the last three months eight countries show actual declines in output in progress.
by:Robert Brusca
|in:Economy in Brief
Global| Sep 12 2024
Is Inflation Targeting Failing? ECB Cuts Rates on Growth Fears as Inflation Lingers
These are not your father’s or grandfather’s central banks. Oh, the names are the same (well, except for the ECB which didn’t exist ‘a generation’ ago). The behavior would be unrecognizable to those who knew Fed policy under Paul Volcker/Alan Greenspan or Bundesbank policy under Karl Otto Poehl and his legacy mates.

What has happened? Is it inflation targeting or is it something more?

INFLATION TARGETING IS FAILING...Instead of working as Ben Bernanke said it would, getting markets to see what central banks want and then acting to make that happen reinforcing the target goal, Central banks have instead used targeting as crutch to promise the target and deliver something else. This dissonance will eventually weigh on central bank credibility and undermine the process that Bernanke said would help banks to achieve their target.

ECB HICP inflation is not that far from its target, but momentum is in the wrong direction and inflation has been over target since early 2021 (38 consecutive months). Core inflation in the EMU is far too high (data lag by one month) and core inflation is accelerating- again moving in the wrong direction.

Some weakness, yes, but is it all that serious? The ECB speaks of a concern about weaker growth, but few of the early reporting EMU members display GDP declines in Q2. Among the 14 EMU members, I have data for only Austria, Germany and Ireland log declines in GDP Q/Q as of 2024-Q2. Austria, Finland, and Ireland log declines in GDP on four-quarter changes – that’s a more serious issue. Among the five EMU member countries that report composite PMI data to S&P, only Germany has a diffusion reading below 50 (indicating contraction). The EMU reading is 51.1 and it improved in August. EMU composite data ranked over the last 4 ½ years has a 51-queue percentile standing putting just above its median for the period (median occurs at 50). France, Italy, and Spain all have queue-standings above their respective 50th percentiles. Ireland and Germany are exceptions; Germany’s queue-standing is weak at the 28.6 percentile. The EMU’s largest economy has been weaker in terms of year-on-year growth only about 25% of the time.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Sep 11 2024
U.K. IP Is Still Weak, Now So Is GDP
U.K. industrial production contributed to a negative monthly GDP surprise today as IP and construction were weak in July offset in the GDP framework by services whose growth kept GDP from falling in the month.

U.K. manufacturing IP fell by 1% in July after rising by 1.1% in June and by 0.4% in May. Sequentially this means U.K. IP is accelerating since its year-on-year change is -1.3%, over six months it is fairly, and over three months the annual rate of change is +2%. That’s not exactly rollicking growth, but it does count as accelerating even if IP is falling in July. However, short of some sharp reversal, the current pattern of output does not bode well for the whole of Q3 (see Q3 to Date).

In July, U.K. industrial production fell by 1.6% for consumer durable goods output, fell by 1.8% for capital goods output, and fell by 0.7% for intermediate goods. The output of consumer nondurable goods advanced by 0.3%.

Manufacturing sector sequential growth rates from 12-months to 6-months, to 3-months, show consumer durable goods output is imploding, declining at an accelerating rate over this horizon. Consumer nondurable goods and intermediate goods both are showing acceleration from12-months, to 6-months, to 3-months. Capiral goods are in no-man’s-land. Output is weak, falling in each period, but it is not a drop that steadily accelerates although, annualized, the decline over three months is faster that the annual decline over 12 months.

In contrast, industry details are far from uniform and often extremely different. Textile & leather output, motor vehicle & trailer output, and mining & quarrying all show a strong tendency to decline over most horizons. Food, beverages & tobacco, and utilities are the two sectors that are exceptions to the weakness, and both show persisting increases with the food group demonstrating output acceleration.

The quarter-to-date calculation (QTD) logs a decline for the headline (MFG output) in July, one month into the new quarter. However, consumer nondurables and materials provide some positive momentum in the unfolding quarter. Industries show increases QTD for the food group and for mining & quarrying, as utilities take a pass on expansion for both July and the QTD as well.

Riding a very weak trend U.K. net output results since COVID struck show manufacturing output net lower – over a period of four and one-half years for all of manufacturing, and all sectors except consumer nondurables. They are up by 13% over this period. That means consumer nondurables have had a steady run, expanding on average by 2.7% year-by-year. Consumer durables output has been flat, intermediate goods output has declined on average a bit faster than nondurables output has expanded. Capital goods output has declined by nearly a half percentage point per year. Overall manufacturing output has been contracting at a pace of nearly 1% per year over the last four- and one-half years.

Meanwhile sector results are widely different. The food group, textiles & leather, and the motor vehicle group have increased output over the period at a double-digit pace ranging from a full period gain of 25% for the textile group to 12.2% for the motor vehicle group. Output in the textile group has averaged over 5% per year, with the motor vehicle group averaging a compounded pace of 2.5%. Meanwhile both the mining group and utilities fell for a net drop of 41%, a compounded drop of over 10% per year.

These are shocking disparities across industries.

The unexpected weakness in early Q3 U.K. GDP could convince the Bank of England that an earlier-than-expected follow-up rate cut is warranted as U.K. inflation is running at 2.2% year-on-year against a core increase at a more stubborn 3.3%. But if the economy is really weakening, looking for more price weakness head would make sense. The next BOE meeting will tell us what the BOE fears most.
by:Robert Brusca
|in:Economy in Brief
Europe| Sep 10 2024
Core Inflation in Key EMU Members: Mostly Above Target and Not Falling
Inflation of the European Monetary Union in August rose by 0.2% compared with 0.3% gain in July and a 0.2% rise in June. The three-month inflation rate at 2.5%, however, is part of a slow progression higher that compares to a 2.2% annual rate over six months and a 2.1% annual rate over 12 months, a moderate but clear accelerating pattern.

Country level trends The four largest countries in the monetary union also are exhibiting patterns that suggest or that outright demonstrate, inflation acceleration at least based on headline measures. Germany is the largest monetary union economy and is a slight exception with a 2.2% inflation rate over three months, down from 2.5% over six months but up from 2.1% over 12 months. France demonstrates inflation rising from 2.2% over 12 months to a pace of 2.4% over six months to a strong 3.6% over three months. In Italy, inflation transitions from a low 1.3% over 12 months to a 3% pace over six months, to another strong pace of 3.7% over three months. Spain is the true exception with inflation well behaved across most of the cohorts at 2.3% over 12 months, an elevated pace but not by much, especially when compared to a 0.7% pace over six months that only ticks up to a 0.8% annual rate over three months.

Monthly results by country The inflation process among these four large countries is still somewhat mercurial as August showed declines in inflation in Germany and Italy on a month-to-month basis while Spain's inflation was flat. On the face of it, this is good news; however, July brought an increase in prices of 0.8% month-to-month in Italy, 0.5% in Germany, 0.4% in France with a moderate 0.2% gain in Spain. So whatever the three-month pace is, it's the product of some fairly erratic monthly numbers and therefore not yet something that we can consider to be very reliable.

Core inflation Core inflation is a different story. Here we get core or at least an ex-energy reading from Germany, Italy, and Spain. The August readings are contained with German ex-energy inflation up by 0.2%, Italian core inflation up by 0.1% and Spain’s core inflation up by 0.3%. These are decelerations from stronger gains in July across the board. And two of these three countries also had larger increases in June than they had in August. Looking at the progression of core inflation for Germany, the 12-month ex-energy rate is 2.5%, the six-month pace is 2.6%, and the three-month pace is 2.4%; all pretty steady stuff. Italy shows core inflation at 2.4% over six months and 12 months that moves up to 3.1% over three months. Spain shows core inflation at 2.7% over 12 months, up to 2.8% over six months and up to 4.3% over three months.

The performance of Brent oil prices explains the headline/core difference as oil prices fell over these progressively longer periods; over shorter periods oil prices have fallen faster tending to push headline inflation down faster over these short horizons contributing to the illusion of inflation deceleration. Even so, deceleration is not a pattern that is detectable in headline inflation for these countries.

The bottoms line here is that core inflation is still stuck and too high and that is too much evidence of inflation accelerating even in the face of easing oil prices for monetary policy to seek further accommodation.
by:Robert Brusca
|in:Economy in Brief
Japan| Sep 09 2024
Economy Watchers Index Portrays Less Weakening
The economy watchers index for August stepped up to a reading of 49.0 from 47.5 in July. The reading for the future index moved up to 50.3 in August from 48.3 in July. Diffusion indexes are constructed so that readings above 50 indicate a net expansion while readings below 50 indicating a contraction. The improvement of the current index in August, while a significant step up, still leaves that reading short of the neutral reading of ‘50’ and therefore, despite the improvement in the diffusion reading value, it continues to indicate contraction in August. Formally the diffusion index indicates a lesser pace of contraction in Japan’s economy. However, the future index signals expansion expected for the six months ahead.

The diffusion of diffusion is at the bottom of the table; that measure indicates the breadth of the change in the monthly diffusion values either month-to-month or over some of the broader periods depicted in the right-hand portion of the table. Over the last three months, for example, the headline and its nine components show improvement in 70% to 80% of those readings for current index readings. The future index shows improvement in all categories in August compared to improvement in 70% of them in July and in June.

Looking at the broader periods over 12 months, six months, and three months… both the current and the future indexes are higher across-the-board compared to a year earlier. But over six months, weakness is broadening as the future index is lower across all categories compared to its diffusion readings over 12 months- and the current index is nearly as broadly weak. Over three months there is recovery in train for the current as well as for the future index with the monthly reading higher across 50% to 60% of the categories-comparing three-month to six-month values. That means either small improvement in more than half the categories is in train, or a mixed picture of balanced ups and downs persists.

Apart from assessing monthly patterns and patterns of growth for a year-in, we can assess the level of the diffusion index compared to their historic distributions of results. The queue standing does that. The current reading as a 60.1 percentile standing while the future index has a 64.8 percentile standing. Both are above their respective medians (medians occur at a 50% ranking). Unfortunately, jobs have a below-median ranking in the both the current and the future frameworks. Current employment has a 28.9 percentile standing – quite weak. However, the distribution is packed tight in the present range of values. The current situation’s 49.7 diffusion reading compares to a full period average reading of 50.3 and a higher median of 53.1. The ranking is comparable to median value but clearly the August value is still quite close to its historic mean. The future index diffusion value, despite its 41.1 percentile standing, is above its historic mean but below its historic median of 52.4.

On balance, the employment readings are getting stronger. The current index has been moving up longer that the future index. Both the headlines are moving higher. But there is some way to go to put both the indexes at a solid level compared to where they have stood historically, based on rankings. The 60th percentile range readings are above their respective medians but are not particularly strong reading levels.
by:Robert Brusca
|in:Economy in Brief
Germany| Sep 05 2024
German IP Drops Sharply in July and Broadly
Industrial production in July fell sharply by 2.4% after rising 1.7% in June and falling 3.1% in May. As a result of this production turbulence, Germany continues to experience declining and decelerating output growth. Over 12-months output falls at a -5.3% rate, over six months the pace steps up slightly to a -5.5% annual rate, but over three months industrial production in Germany is falling at a -14% annual rate.

This sequential slippage is mirrored in the declines of consumer goods, capital goods and intermediate goods production where the production of each of these sectors declines over 12 months, six months, and three months. Consumer goods and intermediate goods decline slightly more slowly over six months compared to 12 months, but all the categories show much sharper declines over three months than over 12 months. There's a clear tenancy for German production to show bigger declines over shorter periods and that's a disturbing development. In addition, all the sectors show declines month-to-month in July.

Manufacturing output in total shows a decline of 3.2% in July. As for overall output, manufacturing increased in June and fell sharply in May. Sequentially manufacturing output is persistently decelerating, as its 5.8% 12-month drop becomes an annual rate of decline of 17% over three months.

Hope in New Orders However, real manufacturing orders break this trend and may offer hope for a turnaround as real orders rise by 2.9% in July and by 4.6% in June after a 1.7% drop in May. Sequentially real orders are not just growing but they are accelerating from an increase of 3.8% over 12 months to an annual rate of 25.7% over three months. The path being sketched out by real manufacturing orders is explosively strong while the path being sketched out by actual manufacturing output is impulsively weak. So it looks like the resolution is going to be for manufacturing output to be dragged up from the depths in the coming months by strengthening orders- or at least that's how it appears from these trends. For the time being, sales remain weak, real sales and manufacturing fell in July, June, and May; they are declining at an accelerating pace from 12-months to six-months to three-months. Real sales and manufacturing declined, at a -5.8% rate over 12 months, at a -6.9% annual rate over six months and then at a -12.2% annual rate over three months. For the time being, manufacturing is a hotbed of cross currents.

Indicators are mixed Other indicators from ZEW, from IFO and from the EU Commission are mixed. These are from surveys that often are a little bit more sensitive and up-to-date readings than data on actually booked orders or on actually executed output or experienced sales. However, there is no hint of the kind of strength that we see in orders in these indicators. The ZEW current index shows negative readings sequentially from 12-months to six-months to three-months, but it does improve sequentially in modest steps. The IFO index for manufacturing does show some step up from 12-months to six-months to three-months. IFO manufacturing expectations also step up from 12-months to six-months to three-months but even this is somewhat moderate from 87.8 as an index reading over 12-months to 90.9 over six months to 92.2 over three months; it's a progression of advance but a minor league advance. Meanwhile, the EU Commission indexes show weakening from a -16.5 in their net diffusion reading over 12 months, to -17.7 over six months, to -17.8 over three months.

Other Europe Three European countries are early manufacturing reporters: Portugal, France, and Norway. Among these three countries, two of them have output declines in July. Norway is the exception with a solid 2% increase month-to-month in July, an increase of 2% in June and at 1.7% in May; it is showing accelerating growth from 12-months to six-months to three-months. Norway is a real success story. However, both Portugal and France show industrial production decelerating steadily from 12-months to six-months to three-months; in both cases, the three-month decline culminates in a negative growth rate in double-digits.

Quarter-to-date trends The quarter-to-date statistics show declines across all German manufacturing categories apart from real manufacturing orders. Of course, that shows a sizeable gain of nearly 38% at an annual rate in the quarter. It stands alone in that regard. The other indicators from ZEW to the IFO to the EU Commission also decline in the quarter-to-date except for the current ZEW index which improves by 6.2 points in July compared to the previous quarter’s average level. Manufacturing output for the three European countries shows sizable declines in the quarter-to-date for Portugal and France with Norway showing an annual rate increase at a stupendously strong 26.3% annual rate.

On balance, manufacturing in Germany is weak and it's weak across all categories. The ray of hope comes from real manufacturing orders that are surging as strongly as current output is declining. Sales in manufacturing are also weak. The IFO indicators for Germany are showing some progression towards better circumstances as is the index from ZEW. The EU Commission is eroding slightly sequentially as well as in recent months. There is hope but it runs against the grain of trend.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Sep 05 2024
July Retail Sales Tick Higher in EMU: Trends Are Weak
Retail sales in the European Monetary Union (EMU) in July rose by 0.1% after falling 0.4% in June and rising 0.1% in May. The 0.1% uptick in retail sales volumes is, of course, quite marginal and it comes amid a cluster of other weak readings. The 12-month growth rate of sales volumes is zero. The annualized growth rate of volumes over six months is 0.6%; the annualized change in volumes over three months is -0.8%. EMU retail sales obviously are weak and have been weak for some time - the volume statistics are quite disappointing.

QTD sales volumes fall In the quarter-to-date, euro area retail sales volumes are falling at a 0.8% annual rate. Of course, it's early in the quarter as it's only July, but that figure represents the July growth rate over the Q2 centered average level of retail sales in the second quarter period - it's a poor start to the third quarter.

Food for thought; some for growth Food and beverage sales indicate slightly better results with still erratic sales over the last three months, but food and beverage volume sales from 12-months to six-months to three-months are transitioning into growth and even into acceleration. And the quarter-to-date food and beverage volume statistics are rising by 1.3% at an annual rate.

Motor vehicle registrations have run out of gas Motor vehicle registrations fell by 3.6% in July after rising by a robust 7.1% in June which followed a 10.8% plunge in May. These statistics have been quite choppy and once again are not reassuring. The sequential growth rates reveal motor vehicle sales to be even worse as they are decelerating and imploding. Motor vehicle registrations over 12 months are falling at a 0.3% annual rate, but over six months they're falling at a 13.8% annual rate and over three months they're falling at a 28.2% annual rate; these are far from reassuring trends. In the quarter-to-date, motor vehicle registrations are falling at a 16.7% annual rate.

European country-level sales look better Turning to retail sales volumes across the monetary union and other European countries, we find a proliferation of month-to-month sales increases in July. Eight countries are listed in the table, only one of them, Portugal, shows a volume decline in July while Denmark has unchanged results, and the rest show gains. However, these numbers are coming from June in which five of these countries showed declines month-to-month, while in May only one country showed a month-to-month decline, which was Spain.

Sequential growth across countries Over three months most of the countries in this table show sales increases; there's one exception over three months, Norway, with sales volumes declining 1.7% at an annual rate. Over six months all countries show increases except the Netherlands and Belgium. Over 12 months increases are posted in five of these reporting countries with three of them showing declines. The declines are logged by Belgium, which has a 4.6% decline over 12 months, by Sweden, which has a 0.8% decline over 12 months, and by Norway, which has a 0.5% decline over 12 months. Among the countries in the table, only Sweden’s sales volumes accelerate and there the acceleration is not very impressive, from -0.8% over 12 months to a growth rate of 0.2% over six months, to a pace of 0.9% at an annual rate over three months. While some European countries are showing more solid and consistent growth rates in retail sales such as Spain, Portugal, Denmark, and the United Kingdom - all of which show sales increases over each of the horizons - in general, sales growth has not been impressive. The year-over-year growth rates are strongest for Denmark at 3.9%, the Netherlands at 3.4%, followed by Portugal at 2%. These are all volume growth figures and so they are relatively impressive in their own right, but for the most part, acceleration in sales volumes is not underway.

Quarter-to-date trends In the quarter-to-date, only two of these countries showed declines in progress and that's Portugal the 0.9% annual rate decline in the quarter-to-date and Norway with a 7.1% annual rate decline in the quarter-to-date. The strongest growth percolating in the quarter-to-date is the Netherlands at 5.4%, Belgium at 4.6%, the U.K. at 4.2%, and Spain at 4.2%. So, there is some life in some of these reporting countries in retail sales, but the trick will be to see if these trends are able to hold up and extend themselves.

Very weak since COVID struck Putting these sales trends in a broader perspective, we look at their percentage changes since just prior to COVID's arrival. Calculating growth back from January 2020, we're looking at a period of about 4 1/2 years. Over that span, Belgian sales are still lower by 8.8%, Sweden’s sales are lower by 2%, in the U.K. sales are lower by 1.9%, in Norway they are lower by 2%. Sales are higher by 3.1% in the Netherlands, and by 3% in Spain; they're higher by 1.3% in Denmark. The data for Portugal don't extend back that far. However, these are poor results. For the euro area, sales volumes are up by 1.9% over this span - less than one-half of one-percentage point per year on average. Food and beverage volume sales are lower by 1.5%. In addition, auto registrations over this period for the EU-15 countries show a decline of 15.9%. The consumer has been a weak force for growth during this period. And it's not surprising since COVID struck, then there was the outbreak of war as Russia rolled into Ukraine.
by:Robert Brusca
|in:Economy in Brief
Global| Sep 04 2024
S&P Composite PMIs Improve on Better Service Sectors
Standard and Poor’s composite PMI readings for August improved globally in 19 of 25 reporting countries. This widespread improvement showed far better improvement in breadth than what has been registered by manufacturing sectors among countries that report those data.

The August result was far better than July when only 10 of 25 reporting countries improved month-to-month. Similarly, June was a weak month with only seven composite PMIs improving month-to-month.

Despite the strong improvement in August, the three-month average finds improvement compared to six-months ago in only 7 reporting units. However, the sequential averages also have a stronger history as the six-month average shows that only 6 reporting units were weaker compared to 12-month averages. The three-month comparison is to a six-month period that saw broad gains. Even so, the 12-month comparison to 12-months ago shows improvement in only 12 of the reporting units, approximately half of them.

Over 12 months, most large/developed economies performed worse including the United States, the European Monetary Union, specifically, Germany, France, Italy, and Spain, as well as Japan. China worsened as well. The United Kingdom was an exception, improving over 12 months compared to 12-months ago.

The unweighted average PMI readings for a group, consisting of the U.S., the U.K., and the European Monetary Union, shows steady improvement from June, to July, to August. Despite uneven sequential results the unweighted average PMIs also have improved from their 12-month averages to their six-month average, to their three-month average.

The BRIC countries excluding Russia (BIC) show steady monthly improvements and show consistent, strong readings above or just below the 55 mark for over three months, six months, and 12 months.

The overall averages of the PMI readings show a tendency to increase but not a clear sequential move in that direction. The overall median readings show the same general reading and trend.

On a composite PMI basis, the number of areas with readings below 50, indicating overall economic contraction, have been reduced to four in August. They total 4 over three months and six months compared to 6 over 12 months. Few economies are showing overall contraction on this measure. While there were as many as eight contracting in July and in June, generally over three and six months the number showing contraction has been small.

The far-right hand column gives the queue percentile standings which place the August readings in an ordered queue of standings in the last 4 ½ years of data. These readings show 12 reporters with current standings below the 50% mark. A reading below 50 would put them below their median over this span. The average reading for the entire group is for a queue standing at 51.8% while the median is at 51.0%. Over this period the 12 readings that are below 50% are simply below their respective medians reading; they do not indicate contraction because these are rankings based on queue standings rather than diffusion data as in the first six columns of data in the table.
by:Robert Brusca
|in:Economy in Brief
Global| Sep 03 2024
Most MFG PMIs Back Off in August
Only four of these 18 manufacturing PMIs improved in August: the United Kingdom, South Korea, Japan, and Turkey. August compares to July when only two reporters improved with two others unchanged. June was the opposite case in which fifteen improved month-to-month. So, in the past two months manufacturing conditions have unwound globally, with few exceptions.

Over three months, the average increased relative to the six-month average in only six-reporters. But over six months, conditions improve broadly compared to their 12-month average with only three deteriorating. Over 12 months compared to the average of 12-months ago, eight reporters are worsening against 10 improving.

Manufacturing has been giving back the gains it was making earlier in year. However, the results are still subtle with the median reading over three months at 49.7, compared to 50.5 over six months and to 49.6 over 12 months. There is little change here.

The country standings for the monthly diffusion values are still tilted to the weak side. The median percentile standing across members is a low 34.8 percentile. Ten members have readings below their 50th percentile. Only three reporters have percentile standings in August above their 70th percentile standing.

Diffusion data show that over 12 months compared to 12 months ago, conditions improved in 55.6% of reporters. Over six months compared to 12 months, conditions improved in only 38.9% of reporters compared to a year ago. Over three months, only 22.2% of reports improved compared to six months. Diffusion underscores the slippage that has been in progress for manufacturing.

Large, developed economies, as represented by the U.S., U.K., EMU, Canada, and Japan, have PMI readings at an average below 50.0 on all horizons and have an overall queue standing at their 31.8 percentile. BRIC countries have a queue standing at their 47.1 percentile. Asian countries have a queue standing above the 50% mark, at their 53.4 percentile. The most highly developed countries are the laggards.
by:Robert Brusca
|in:Economy in Brief
Global| Aug 30 2024
Unemployment Rates Still Falling in EMU
Unemployment fell in the EMU in July to 6.4% from 6.5% in June. The EMU rate has fallen over three months, over six months, and over 12 months.

Rate trends run mixed Among the 12 long-standing EMU members in the table, unemployment rates fell in four of them in July and rose in three. Over three months, 6 of 12 unemployment rates fell (with two unchanged). Over six months, five of 12 fell (with three-unchanged). Over 12 months, four of 12 fell with two unchanged. The Monetary Union is experiencing what is probably the late stages of unemployment rates settling lower as other members see unemployment rates beginning to rise. In Germany, the unemployment rate has been rising by four-tenth of a percentage point over 12 months, the same as Ireland; there is a six-tenth rise in Luxembourg, and a one-percentage point gain in the Netherlands and in Finland.

On the other side of the coin, unemployment rates over 12 months fell by 1.3 percentage points in Italy, by 1.2 percentage points in Greece, and by 0.5 percentage points in Austria and in Spain.

There has been a focus on how weak conditions remain in Europe, especially because Germany and its industrial gauges have been so persistently weak, but the unemployment trends tell a different story of mixed trends- with a number of still very economic-friendly trends in play.

Unemployment rate levels in EMU are low Moreover, the level of unemployment rates in the EMU is low. Only Luxembourg and Finland have unemployment rates above their respective medians on data back to 1995. Six reporters in the table have unemployment rates that rank in the bottom 20th percentile of their historic results since 1995. Three others congregate near the border of their lower 25th percentile boundary. Unemployment rates in the EMU are undeniable low with few exceptions.

Even so rates are clearly rising for some countries, most notably, Europe’s largest economy, Germany.

In many comparisons of data with January 2020 conditions today do not compare favorably to what they were before Covid struck but for unemployment rate comparisons, we find seven of these reporting EMU members have unemployment rates lower than they were before Covid struck. While many industrial comparisons and confidence comparisons show that current conditions are worse, on this comparison, unemployment rate comparisons are considerably more upbeat. Luxembourg is minor exception with its rate one-tenth of a percentage point higher, Belgium and Germany are two more exceptions with their respective rates higher by just two-tenth of a percentage point. Austria’s unemployment rate is higher by 0.5 percentage points and Finland’s rate is higher by a sizeable 1.7 percentage points.

Unemployment elsewhere... For comparison, I include unemployment rates for the U.S., the U.K., and Japan. The U.K. claimant rate is much higher with an 82.3 percentile ranking. All three of these countries have unemployment rates higher in July 2024 than in January 2020.
by:Robert Brusca
|in:Economy in Brief
Europe| Aug 29 2024
EU Indexes Show Steady Ordered Performance with Some Improvement
It still seems unusual to look at a plot of the EU Commission indexes for Italy, France, Germany, and the European Monetary Union to see Italy consistently showing the best top-line reading and Germany consistently showing the worst bottom-line reading. If you want to make it more confusing, we could put Spain on the chart and Spain would emerge as even stronger than Italy. Clearly the post COVID and post Russian-Ukraine war environment has turned what used to be the global economic order on its head.

If we evaluate the big four Monetary Union economies by their queue standings on data back to 1990m Spain has the strongest standing and is healthy country with the standing above its median on the period with the 64.9 percentile standing. France is next at a 48.6 percentile standing, followed by Italy at 41.7% and Germany at a very weak 18.8%. The Monetary Union has a 36.8 percentile standing. Among the 18 early reporting countries, only 5 have percentile standings above the 50% mark which puts them above their historic medians for this timeline.

The Monetary Union in August saw an improvement in its overall index to 96.6 in August from 96.0 in July; however, this is still a weak, 36.8 percentile standing. In August, there is an improvement in retailing as the index rose to -8 from -9 in July and an improvement in services where the services diffusion reading rose to +6 from +5. However, construction deteriorated to -7 in August from -6 in July and consumer confidence backtracked to -13.5 from -13, while the industrial sector remained at -10.0 for a number of months running. As far as sector rankings are concerned, construction has a 67.4 percentile standing, retailing has a 50.1 percentile standing - barely above its historic median which occurs at a ranking of 50. Services, consumer confidence, and the industrial gauge all have rankings below 50; in fact, all of them except services are below the one-third standing mark and their ordered queue of rankings of data back to 1990. Services aren't far from that, however, with the 36.3 percentile standing.
by:Robert Brusca
|in:Economy in Brief