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

Denmark| Jun 22 2026
Danish Confidence Improves As Inflation Expectations Pull Back Sharply
Danish consumer confidence rose to -14 in June from -19.8 in May, a small pickup for a still-negative net reading. In June, the reading has a standing at its 7.9 percentile on data back to 1995. So, this confidence headline still has a lower 8% reading overall.

On the month, all seven component readings improved compared to May, although the environmental assessments were little changed across four components. As for the environment, the most changed reading is the improved favorability of the time to save, a metric that is not always a positive category.

As for the seven categories, the readings on the financial situation, general economy and the unemployment rate all improved month-to-month, while the inflation metrics both backed down sharply.

These changes show the financial situation and general economy gauges all at rankings in the lower 20th percentiles, with the outlook for the next 12 months having a standing in their lower 10th percentiles and lower for both the financial situation and the general economy.

Consumer prices, despite a strong monthly step-back, have a 90.2 percentile standing for prices over the past 12 months and a 94.3 percentile standing for the CPI over the next 12 months. Despite some let-up in concerns about unemployment, the unemployment gauge has an 85.1 percentile standing, still substantially elevated.

The environmental readings are less negative, starting with the ‘favorability of the time to purchase,’ a bit weaker month-to-month but improved on balance over two months. The June reading is slightly better than its 12-month average but still has a ranking only in its 21st percentile. The favorability of the time to purchase over the next 12 months is a tick weaker month-to-month and about a point worse than its 12-month average. Its June ranking is in its lower 10th percentile of its historic queue. The favorability of the time to save has a stronger ranking, but this is a more equivocal category. It is improved month-to-month and only slightly stronger over two months The June reading is stronger than its 12-month average, with a ranking in its 47.6 percentile—improved compared to previous categories but still worse than its historic median since 1995 (the median occurs at a ranking of 50%). The ‘general financial situation of households now’ ticked lower in June from May but is stronger on balance over two months. The June reading is above its 12-month average and has a 59.2 percentile standing—above its median.

On balance, Denmark shows improving confidence, progressing slowly but on the right path. There is a sharp downward adjustment in inflation, especially over the next 12 months, despite global conditions. Still, the ranking of the confidence metrics are uniformly weak.
by:Robert Brusca
|in:Economy in Brief
Europe| Jun 18 2026
EMU Unemployment Remains Low
Unemployment in the European Monetary Union stayed at 6.3% in April, just a tick above its all-time low. In the more inclusive EU, the unemployment rate hovered at 6%, just two tenths of a percentage point above its all-time low. Unemployment conditions in the monetary union remain low without many signs of acceleration.

The unemployment rate in April fell in Italy, Ireland, Greece, Portugal, and the Netherlands. The unemployment rate increased month-to-month in Finland.

In March, the unemployment rate declined in Austria, Belgium, Germany, Finland, Italy, and the Netherlands. It rose month-to-month in Greece and Luxembourg.

Over three months, the unemployment rate in these 12-early reporting monetary union members fell in five countries: Belgium, Germany, Italy, Ireland, and the Netherlands. In contrast, unemployment rose in five countries: Portugal, Greece, France, Finland, and Austria.

Over six months, unemployment rates fell in six countries: the Netherlands, Portugal, Italy, Germany, Belgium, and Austria. This was against increases in six countries: Greece, Finland, France, Luxembourg, Spain, and Ireland.

Year over year, the degree of inflation progress is much thinner, with the unemployment rates falling in only three countries Italy, Spain, and Portugal with increases in unemployment for all the other countries in the table.

Unemployment rates continue to rank low in the monetary union, with only three monetary union countries having their unemployment rates ranked above 50%, putting them above their respective medians on data back to the year 2000. Those three countries are Luxembourg, Finland, and Austria. For the remaining countries, the rankings of their unemployment rates over this period are not even as high as their 30th percentiles. Italy, at present, is experiencing its lowest unemployment rate of the period.

Unemployment conditions in the monetary union remain solid. The past two weeks were significant for monetary policy and global economics, with the ECB raising rates, Japan raising rates, and the United States keeping rates unchanged but moving away from an easing bias in policy that had been in effect for quite a number of months. Today the Bank of England, after experiencing some significant inflation progress, decided to keep its policy on hold for another session. An agreement between the U.S. and Iran securing an opening of the Strait of Hormuz was signed, paving the way for potentially improved oil flows, lower inflation, and less uncertainty in the period ahead.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Jun 17 2026
U.K. Inflation Dips and Shows Progress
It's an interesting time for the Bank of England to be meeting; it has its next policy meeting on June 18. Top money center central banks have been meeting, and the European Central Bank delivered a rate hike, with what is believed to be a likelihood of another hike before the end of the year. The Bank of Japan as just met and executed a 25-basis-point rate hike that brought the overnight interest rate up to 1% for the first time in 31 years. The Federal Reserve meets today and although the Fed is not expected to make an interest rate change, it is widely expected to remove the language that implies the next rate change is likely to be a reduction. Against that background, there is a pending deal to be signed on Friday between the United States and Iran to end the hostilities, to open the Strait of Hormuz, and to allow a normalization—or at least a transition toward normalization—of traffic flow through the Strait of Hormuz and the restoration of the delivery of the world's oil supplies.

Against this background, the Bank of England will be making its rate decision. Part of this background shows other central banks having taken steps to become less accommodative or more vigilant against inflation risks and what have been ongoing overshoots of inflation targets by monetary policy globally. The Bank of England is part of this phenomenon as its rate of inflation, measured by the CPIH, is 3% year-over-year, a full percentage point above where it's supposed to be. However, both the CPIH and the HICP treatments for measuring U.K. inflation show inflation edging slightly lower—from 3% for the CPIH over 12 months to 2.7% over three months annualized. For the HICP, it moves from 2.9% over 12 months to a 2.7% annual rate over three months. Both of these are small moves but in the right direction. In addition, the CPIH core measure, excluding food, energy, alcohol, and tobacco, shows inflation declining from 2.9% over 12 months to 2.6% at an annual rate over six months, and to 1.7% at an annual rate over three months.

In short, inflation progress in the U.K. is very much in gear for the headline; inflation is quite moderately easing, however. For the core, the move lower is impressive and considerable. The question is whether the MPC at the Bank of England will find these movements sufficient in and of themselves to stay their hand and hold interest rate policy, or whether the Committee will join the ranks of central banks hiking interest rates to make sure that inflation makes that turn lower.

The situation in the Strait of Hormuz is hopeful, but not definitive, and there have been a number of ceasefires in the Middle East that have been called and then broken up relatively quickly. This time, markets are reacting to this particular announcement much more decisively and treating it as if this one is the ‘Real McCoy’ with oil prices having fallen down into the mid $70/barrel range and other indicators showing that markets are convinced that prices are moving lower too. Are the Bank of England's MPC members buying onto this as well? Or are they going to treat this as perhaps one last opportunity to get interest rates up and to make sure that the inflation rate goes down?

U.K. inflation on a monthly basis shows a slight tendency to accelerate in May, with inflation diffusion measuring inflation acceleration month-to-month at 58.3%, above the neutral reading of 50. However, diffusion had been at 50% in April and at 41.7% in March. Acceleration has been broadly blunted. In addition, the May increase in the CPIH was only 0.1%, the same as in April, with March having posted a much stronger increase of 0.4%.

Looking at trends sequentially over 12 months, six months and three months, diffusion is only 25% over 12 months; it is 50% over six months and 25% over three months. These metrics reinforce the view that inflation is not broadly accelerating but rather decelerating and moving back into line.

Taking the year-over-year inflation rate, it's a ranking of overall inflation rates back to January 2000. The headline CPIH is still high at a 74.4 percentile standing; that means it has been higher than 3% about 25% of the time and lower about 75% of the time. The average ranking across the various metrics in the table is 61%. That's above a ranking of 50% that delineates the median for the period. And despite the fast fall in the CPIH core rate, the year-over-year core is at 2.9% and has an 81.2 percentile ranking, meaning it has been higher since January 2000, less than 20% of the time. However, that 12-month rate of 2.9% is now down to 1.7% over three months. There are too many ways to look at inflation, at the environment, at what other central banks have done, and at trends to know with any certainty what the BOE will do.
by:Robert Brusca
|in:Economy in Brief
Global| Jun 16 2026
ZEW Shows Mixed Conditions and an Expectations Rebound
The ZEW diffusion survey (an up-minus-down survey) showed mixed improvements in the economic situation and improvements for macroeconomic expectations in June. The report shows the economic situation improving in the United States and China, with the euro area taking a small step back (to -43.4 in June from -41.4 in May), while Germany also saw a step back in the economic situation (to -81.0 from -77.8). The ranking metrics show the German reading as lower only 13.8% of the time—the weakest showing among the four. The EMU ranking is at a 36.7 percentile, with the U.S. ranking close to that at a 42.5 percentile. China has a 76.2 percentile ranking over a shorter timeline.

Macro expectations show solid improvements reported in Germany, the U.S., and China. Macroeconomic rankings all are muted, with the U.S. at a 39.9 percentile standing as the strongest, followed by Germany at a 35.2 percentile standing and China at a 22.2 percentile standing.

Inflation expectations are still high across the board, ranging from a low percentile standing for the EMU, Germany, and China—from a euro area low of 78.6 to a high standing for this group at 85.7 for China. In contrast, the U.S. ranking is still high, but only at its 61.8 percentile. And all the inflation expectations readings fell in June as optimism on opening the Strait of Hormuz has been growing.

Nonetheless, expectations for short-term rates have been rising. They rose solidly in the EMU and China, and strongly in the U.S., from 10.5 in May to 38.5 in June.

In contrast, long-term rate expectations rose across the board as well but by modest amounts. The rankings for short-term expectations are stronger for all three countries compared to the ranking on long-term rate expectations. I suppose we can understand that as expectations of anti-inflation medicine.

Stock markets are assessed as higher month-to-month in the EMU and in all three countries. China has a strong ranking for its stock market assessment at its 81st percentile. The U.S. standing is above its median at its 51.5 percentile; the euro area expectation is at its 34.2 percentile, with German stock market expectations still weak at its 23.6 percentile.
by:Robert Brusca
|in:Economy in Brief
Japan| Jun 15 2026
Japan’s Surveys Mixed in April but Mostly Weak
The economy watchers survey, along with other surveys, was doing fine until about March in the wake of the Iran war and the closing of the Strait of Hormuz. With that action, the economy watchers index dove sharply from a level of 48.9 in February to 42.2 in March and slipped further to 40.8 in April. The various sector gauges for the retail sector, eating & drinking places, the service sector, and employment are all lower. The only improvement in April came from the future index, where there was some minor optimism about the potential for conditions to improve ahead. And, of course, over the weekend, there is the announcement of a U.S.-Iran deal to end the hostilities between the two countries. That is expected to be signed on Friday and then will put the war into a pause phase for the next 60 days, with the hope that the two sides can come to agreement on some of the stickier elements, including Iran's access to nuclear materials, which has yet to be hammered out.

That omission makes the announcement of this arrangement as a conflict ending deal hugely speculative. Another sticking point is that Israel is not on board and is still engaged in fighting with Hezbollah.

The Teikoku survey, another survey using diffusion indexes that describes Japanese sectors, weakened sharply in March and weakened across the board again in April. Manufacturing, retailing, wholesaling, services, and construction sectors all are posting weaker numbers in April than in March.

The percentile rankings for the economy watchers survey and the Teikoku surveys are both very weak, with the economy watchers standings in the 10th percentile range or lower; the Teikoku rankings are generally higher, around the 30th percentile or perhaps as low as the 20th percentile, as seen in construction. These are still very weak readings. All the raw diffusion readings are below 50, indicating contraction.

The sector indexes from METI on manufacturing and services, which both weakened in March, rebounded in April; in both cases, the April readings were above the February readings. Standings of these indexes based on growth rates are around the 80th percentile; at the 79th percentile for industry and at the 82.5 percentile for the tertiary or services index. Based on the value of the index itself, the tertiary index has a standing at its 98.9 percentile, which we would expect over time for an index that simply grows, as is the case for the METI indexes that are not diffusion indexes. However, the industrial index for Japan has only a 19.9 percentile standing, indicating the stress that Japan's industrial sector has been through, although the current ranking based on the growth rate shows that there is some recovery in progress. The industry level index is 6.3% below its January 2020 level, while the tertiary index is 3.1% above its January 2020 level.

The leading economic index has continued to rise during all these times. It rose in February compared to January, and it rose again in March compared to February; now in April compared to March, it was up again to 115.9, from the March reading of 115.4. Based on year-over-year growth, the leading economic index has a 95.1 percentile standing, which is relatively strong. Based on the index level, we get another strong reading at the 93.2 percentile mark. The leading index is also up 12.9% from its January 2020 level.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Jun 12 2026
U.K. IP Makes Some Recovery
Industrial production in the United Kingdom took another step up in April, rising by 0.4% after gaining 1.2% month-to-month in March. Consumer durable goods production fell by 0.7% and capital goods production fell by 0.6% in April, but nondurable goods production increased by 0.8% and intermediate goods output increased by 1.1%. Given the weighting for these sectors, all that amounted to an overall increase of 0.4% in manufacturing output.

In March, there had been month-to-month increases in each of these sectors. Sector by sector gains were quite substantial in March for all the sectors, except for capital goods output up only 0.1%; capital goods output has been weak over the last several months and has come through a period of some significant volatility.

Sequentially, U.K. manufacturing output has registered gains over 12 months, six months and three months. The 12-month gain is only 1%, but over six months output expands at a 6.4% annual rate, and while it stepped back to a 5.7% rate of expansion over three months, there is a hint of acceleration.

Sequential trends in manufacturing output Looking at sectors, there are two that have accelerated over this time span; the output of consumer nondurable goods and the output of intermediate goods. Nondurable goods output rose by 0.4% over 12 months, then stepped up to an 8.1% pace over six months and rose further to an 11.1% pace over three months. For intermediate goods, output declined by 0.9% over 12 months, then switched to post a gain at a 3.2% pace over six months and then again at a 9.7% annual rate over three months. Durable goods output has a hint of acceleration but doesn't quite go over the hurdle as its 8.7% year-over-year growth rate fades to 5.7% over six months but then jumps back to 10.1% over three months. Capital goods output is more indeterminate, with a 3.9% growth rate over 12 months, a very strong 9.5% growth rate over six months, and then a decline of 1.9% at an annual rate over three months.

On a quarter-to-date (QTD) basis, all the sectors are showing increases except for capital goods where output is falling at a 3.1% annual rate. The QTD calculation as of April is only one month into the new quarter; the quarter’s overall output is growing at a 7% annual rate. Manufacturing sectors have recovered fairly well from the difficulties during COVID. The exception is intermediate goods where output as of April 2026 is still 17% below what it was back in January 2020. However, if we evaluate the sectors on their current year-over-year growth rates, we'll find consumer durables has a strong standing at their 86th percentile and capital goods, despite its recent weakness, has a 71.5 percentile standing among its growth rates back to January 2012. However, manufacturing growth overall at 1.0% has only a 43.6 percentile standing. Intermediate goods (that registered a decline over 12 months) have a 40.7 percentile standing. Consumer nondurables, despite their current acceleration string, have only a 25.6 percentile standing, but that's based on the year-over-year growth rate of only 0.4%.

U.K. industries The industry level growth rates and standings for the United Kingdom show more diversity, with current growth rates above their medians for textile & leather as well as for utilities. Food, motor vehicles, and mining generate growth rates below their medians on data back to 2012. However, comparing aggregate levels of output to January 2020 shows three sectors: textile & leather, mining & quarrying, and utilities that report a level of output below where it was over six years ago. The shortfalls in mining & quarrying and in utilities are stunningly weak.

Overall, the manufacturing sector is doing quite well by comparison with past trends. But parts of the U.K. economy are clearly going through some massive changes.
by:Robert Brusca
|in:Economy in Brief
Europe| Jun 11 2026
EMU Inflation and An ECB Rate Hike
Channeling ‘The Who,’ the ECB implemented its 'We Won’t Get Fooled Again' rate hike. During COVID, inflation spiked around the world as central bankers were late with rate hikes. Arguably, too many of them followed the lead of the U.S. Federal Reserve. The ECB leaned against that by hiking its key deposit rate by 25bp today.

Both the chart and the table show how inflation has recently soared sharply in the countries of the European Monetary Union. However, the price gains are concentrated in the headlines and driven by oil prices. Still, oil price gains this large and persistent—and potentially long-lasting—will permeate the pricing of most goods since there will be knock-on effects through transportation costs. The ECB has therefore taken a step to keep in line with the increase in energy prices.

If there are further impacts from energy prices, the ECB has the door open to move again. But if price pressures wane, the ECB will be under no pressure to act again.

For now, we can see that headline inflation across the European economic area is generally accelerating strongly and somewhat uniformly. The three-month annualized HICP rose at a 6.3% annual rate. With three-month inflation among these 11 long-lived EMU members, the highest three-month pace is 13.5% in Luxembourg. Germany has the lowest inflation over three months, at a 4% pace.

The 12-month inflation pace is better contained, of course, with a top gain of 4.5% in Greece compared to the slowest pace at 2.5% in France and Germany. Over three months and 12 months, headline inflation shows deceleration occurring in none of these countries on these two timelines. So, the ECB action is timely.

The median gain for the group over three months is 6.5%, close to the overall EMU weighted result. The 12-month median is at 3.2%, also close to the 12-month EMU pace.

By comparison, I calculate the median for the core at 2.2% over three months and 2.0% over 12 months—right on the ECB’s inflation objective. Core inflation is never the central bank’s target, but it does strip out the volatility. So, we can understand the ECB’s move as an effort to keep up with what might be a changed trend. And if it is not a changed trend, then the ECB can peel its rate hike back. But for now, it is going to stay close to the short-term impact on the inflation rate to be sure that it will control inflation developments in the future. This is a good way to not repeat past mistakes.
by:Robert Brusca
|in:Economy in Brief
Japan| Jun 10 2026
Japan’s PPI—The PPI Is Not the CPI
Once again, we are seeing Japan’s PPI creating a separation from the CPI. Both the CPI and PPI were trending lower before the attack on Iran. The CPI has better maintained its downtrend, but the PPI has been blasted higher. In 2021, there was also a huge spike in the PPI that the CPI did not follow immediately, although the CPI eventually responds, rising in a much more muted way.

These behaviors caution us from thinking that the CPI is going surge in step with the PPI but also warn us not to expect this gain to be ignored by the CPI. There will be a lagged response.

The PPI explosion is really strong, with the three-month annualized increase in the PPI and manufacturing prices both approaching 20%. Both measures are up at a much more muted 6% to 6.5% over 12 months, so the acceleration has been strong and sudden.

The table also shows lagged data that re-express the PPI trend to put it on the same timeline as Japan’s CPI and the U.S. and EMU PPIs. The PPI in the EMU has surged in line with the gains seen in Japan. However, in the U.S., the PPI has accelerated from a gain of 2.4% over 12 months to an annual rate rise of just 7.8% over three months.

But in Japan, the CPI and core CPI gauges have continued to temper their rises, using data through April and looking at sequential growth pressures on Japan’s CPI. It’s quite amazing!

Japan imports its oil and so would seem quite vulnerable to oil price spikes. However, because it is vulnerable, Japan takes steps to assure its supply and control its oil costs by arranging long-term contracts. That has helped to contain the impetus of surging global oil prices. Globally, oil (Brent, in dollars) is off sharply in May after turning slightly lower in April. Sequentially, Brent prices are up 44.4% over 12 months, up at a 110.2% annual rate over six months, and still up at 187.6% annualized rate over three months.

The table also shows some simple correlations with Brent prices. It demonstrates that the correlation between PPI prices of various sorts and Brent ranges from 0.4 to 0.5. But the correlation to Japan’s CPI price metrics is negative. So far, Japan’s CPI has been true to those results.

The Bank of Japan continues to struggle with its own view of the inflation risk. It is wary of damaging the economy but also concerned about allowing the door open to inflation because of its massive debt-to-GDP ratio. The BOJ is going to remain on inflation watch for some time.
by:Robert Brusca
|in:Economy in Brief
Germany| Jun 09 2026
German IP Rebounds in April
In the wake of a mixed in somewhat complex orders report from Germany yesterday, today Germany released its industrial production report. It shows output up by 0.4% in April after several months of declines. There was a strong gain of 1.9% month-to-month in consumer goods output and another strong gain of 1.4% in intermediate goods output. However, capital goods output continues to be weak, falling 1.5% month-to-month and continuing a string of five months in a row when manufacturing output for capital goods has declined.

Sequentially, overall output is showing strengthening growth rates from 12 months to six months to three months. The tendency to strengthen is driven by intermediate goods that have the exact same pattern in play. However, capital goods are showing increasing weakness from 12 months to six months to three months, culminating in a three-month annualized growth rate of -10.5%. The growth rate in consumer goods is weaker over three months and over 12 months but isn't intact progressively over all three periods. The chart is helpful here as it shows recent weakness and a more recent rebound that still leaves year-over-year growth rates declining.

Manufacturing output shows declines over each of these three periods without a clear trend tendency for speeding up or cooling down. Real manufacturing orders are close to accelerating over this same sequence of dates, while retail sector sales in manufacturing show increases in two of the periods, with a decline over three months at the end of the sequence and without a clear trend in place.

Other German industrial indicators are showing consistent weakness and deterioration from 12 months to six months to three months. That holds for the ZEW current index, the IFO manufacturing index, the IFO expectations index for manufacturing, and the European Commission’s index of industrial activity.

As for other early-reporting European economies, we have France, Spain, Portugal, and Norway to compare. France is showing acceleration from 12 months to three months. Spain comes close to showing consistent acceleration and finishes with a massive 60% annual rate of increase over three months. Portugal fails to show consistent signs but ends with strong output growth over three months as well. Norway also fails to show a consistent pattern and has a solid 2.3% growth rate over three months. The results from France and Spain are the most impressive among these—France because it shows consistent acceleration, and Spain because it is so very strong over the last three months.

In the quarter to date (QTD)—with one month of data in hand for the second quarter—all German sectors are showing expansion except for capital goods and manufacturing overall. The indicators for Germany show weakened conditions as we step into the new quarter, except for the EU Commission index. The four European countries we chronicled earlier, all show gains in the quarter to date, with France and Spain showing the most pickup.

The final column of the table ranks year-over-year growth rates on data back to 2006. On this basis, only the German intermediate goods sector has a year-over-year growth rate that ranks above its median for the period. Real manufacturing orders are close to their median with a 49.2 percentile standing, whereas the median occurs at a ranking of 50%. For the other industrial indicators, we compare them to historic index levels, and all four of the indicators are substantially below their historic marks since 2006. Meanwhile, for the four countries in Europe, three of the four are showing industrial output results that rank above their historic medians: Spain shows a 79th percentile ranking, France has a 77th percentile ranking, and Portugal has a 53rd percentile ranking. Only Norway has a subpar (below-median) 25th percentile ranking.
by:Robert Brusca
|in:Economy in Brief
Germany| Jun 08 2026
German Orders Drop, But Trend Offers Hope
German orders, now available for April, show both domestic and foreign orders are sketching a herky-jerky path higher. The volatility is such that we can't be sure the momentum will remain higher, but for the time being, the present orders are oscillating around an upward trend. There is a particularly striking downward movement in domestic orders, with three sizeable month-to-month drops in the last four months. The drop in foreign orders, at 4.2% month-to-month, is sharp, but that follows two months of very strong gains—although they follow one month of a substantial drop. German orders are simply sketching out a very dissonant path—very hard to discern a trend.

German orders show systemic sequential declines in domestic orders, an event that is offset by systematic sequential acceleration in foreign orders. The net result of total orders is an order slowdown over six months and four months that gives way to a sharp rise over three months.

Sector sales, expressed also in real trend, show consumer durable goods sales and intermediate good sales both engaged in alternating behavior.

Early in Q2, German orders show declines overall an in domestic orders that are only partly blunted by a sizeable rise in foreign orders. Sector sales show a real gain in manufacturing, pushed ahead by consumer durables and intermediate goods, against weakness in nondurables and in capital goods. The broad ranking of annual growth rates for sales and orders show abject ranking weakness for orders and all sales, with the sole exception of orders by foreigners—that series has a ranking above its median at the 60.7 percentile mark.

To compare German industry with other key European sectors, we use the EU industrial confidence gauges. This shows Spain as the only country among Spain, Italy, Germany, and France, with an industrial sector ranking above the 50th percentile mark (above its median reading). All of the manufacturing readings have negative values in April; however, only Germany shows an advance in progression from 12 months to six months to three months.

The industrial order report for April is weak, but there are undercurrents of uptrends embedded in the report. The month’s results and trends may be better than the current month’s topical readings suggest.
by:Robert Brusca
|in:Economy in Brief
Europe| Jun 05 2026
EMU GDP Contracts; Year-on-Year Growth Slows Sharply
GDP growth in the European Monetary Union backtracked in the first quarter, falling by 0.9% at an annual rate after rising by 0.7% at an annual rate in the fourth quarter of 2025. The year-over-year growth rate from the monetary union also slowed sharply to 0.3%. The small positive gain in Q1 2026 comes after gains of over 1% in year-over-year calculations since the third quarter of 2024. The queue ranking of the year-on-year GDP growth rate, on data back to 1997, places the Q1 GDP result in its 21st percentile—roughly a lower one-fifth ranking.

Among the 14 EMU member reporters of GDP data in the table, five countries experienced quarter-to-quarter declines in GDP in Q1 2026: France, Ireland, Luxembourg, Malta, and Austria. Ireland has some peculiar accounting issues because a number of multinational companies are headquartered there for tax reasons; this produced a decline in GDP at a 40% annual rate to dominate these results. And the sharp Irish decline in GDP has an outsized impact on the European Monetary Union GDP report itself. In contrast, among the individual reporting members, the median change in GDP in the first quarter was a 0.2% increase at an annual rate; both Portugal and the Netherlands experienced GDP increases of that magnitude.

In addition to that, the fourth quarter of 2025 showed decelerations in GDP for six of these reporting monetary union members; however, GDP declined in only two of these members in the fourth quarter.

Year-over-year data show GDP growth rates in the first quarter declining broadly in 11 of the 14 reporting members in this table. That compares to a slowdown reported by six member countries in the fourth quarter of 2025.

The four largest monetary union members experienced a slowdown in GDP, with growth at 1% in the first quarter compared to 1.3% in the fourth quarter; that 1% growth rate is the same as in the third quarter of 2025. The rest of the monetary union saw a sharp decline as GDP contracted at a 5.7% annual rate, with the Irish data playing a big role in that for the rest of the monetary union. For the four largest EMU economies, GDP advanced by 0.9% in Q1 2026 on a year-over-year basis. Year-over-year changes show relatively steady growth in the four largest monetary union economies, with growth rates of 1% or 0.9% in each of the last four quarters, while the rest of the monetary union shows much stronger growth rates over the last four quarters, but for that group, growth rates have been generally decelerating. That process culminates in a decline of 1.2% for year-over-year GDP growth in Q1 2026 for the rest of the EMU.

Over these last four quarters when the rest of the monetary union growth rates—apart from the four largest economies—showed steady slippage, Switzerland also showed a steady deceleration in GDP growth; so has the United Kingdom. Japan also has weakening growth over these last four quarters. However, the U.S. does not fall into that pattern, having maintained steady growth and then experienced a pickup in growth to 2.6% year-over-year in Q1 2026.

Few show above-median growth Among the countries in the table, very few have GDP growth rates year-over-year that are above their medians on performance back to 1997. However, countries with queue standing above their 50th percentile for growth rates reflect that phenomenon; those countries are the U.S., Spain, Portugal, Italy, Luxembourg, Greece, and Denmark. Belgium, Ireland, Cyprus, and Switzerland have growth rates ranked below the 20th percentile in the queue ranking system. The median and year-over-year growth rate in the monetary union has a 30.4 percentile ranking, similar to Japan with a 36.4 percentile ranking for its year-over-year GDP. Growth metrics are showing some struggle, and the combined weight of the ongoing Ukraine war and the new effect of the Middles East conflict take their tolls.
by:Robert Brusca
|in:Economy in Brief
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