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

Germany| Apr 19 2024
German PPI Stops Falling and Flatlines – Is That Good Enough?
Global inflation trends have been in concert for major money center countries/areas- excluding Japan, of course. Inflation flared after Covid struck and in the wake of the Russian invasion of Ukraine. It continued to ramp up more than central bankers thought. Interest rates were raised from very low levels- the U.S. led the pack in terms of rate hike speed, getting its key rate up to its prevailing inflation rate in record time after a long period of being asleep at the switch. It said it stood prepared to hold rates ‘higher longer.’ Then the next unexpected thing happened; inflation fell sooner and more sharply than expected and it did this globally, not just in the U.S. However, we are now into phase three of this process: inflation went up more and longer, inflation then fell more and faster and now inflation is off peak but not back were we want it—and it is looking stubborn. This is more or less a global money center country/area description of inflation. Inflation that went through its boom-bust phase, as you clearly see from the sequential growth rates of the German PPI is now up from its lows. The headline price level is falling but losing momentum. The core PPI is only falling in its ‘legacy’ 12-month rate.

German PPI inflation falls by 2.8% over 12 months, falls at a 3.4% annual rate over six months, and falls at a 1.2% rate over three months. Core PPI inflation falls by 0.7% over 12, months then rises at a 0.7% annual rate over six months and three months. The core points the way for trend.

The NSA (not seasonally adjusted) sequential data show acceleration across and three major PPI sectors: consumer goods, investment goods and intermediate goods. Prices only fall over 12 months for intermediate goods. All other sectors trends show increases by period and all show acceleration in progress.

German CPI data show higher inflation over three months than over 12 months for the headline and the core with a dip in between – not a steady state acceleration but a clear hint at where things are headed and with German inflation rates clearly above the EMU-wide 2% mark.
by:Robert Brusca
|in:Economy in Brief
Europe| Apr 18 2024
Vehicle Registrations Losing Momentum in Europe
Registrations for cars in Europe for March fell by 8.8% month-to-month after falling by 1% in February. January, however, had been a strong month for registrations in Europe. The sequential trends are mixed and do not show a clear way forward. The 12-month change in sales/registrations falls 4.7%. Over six months registrations fall harder at an 11.9% annual rate, but then over three months registrations gain at a 7% annual rate. These data are prone to volatility. To adjust for that, I execute the same calculations on three-month average data to smooth out the volatility and let the trend shine through. Unfortunately, this procedure still does not produce a clearer picture of trend.

Chart 1, executed on year-over-year growth rates, shows registrations gradually losing momentum among reporting countries. Sequential growth rates across countries finds Germany and Spain with accelerating sales/registrations. France and Itay with fairly clear trends showing decelerating sales. Meanwhile, the U.K. trend shows confusion with no clear pattern emerging.

Looking very broadly, all reporting countries show registrations lower in March everywhere except for France, in 2024 compared to January 2020 before Covid struck. France is the lone exception that shows registrations in March higher by just 2.2% than they were over four years ago. That is not exactly a stunning success.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Apr 17 2024
U.K. Inflation Cools in March but Not by Enough
When the Music Stopped, or at Least the Inflation Progress... U.K. inflation on the HICP measure eased to 0.4% in March from 0.5% in February. The month-to-month CPIH measure also rose by 0.4% from 0.5% in February. The CPIH excluding food, energy, alcohol, and tobacco rose by 0.4%, the same as in February. The Bank of England looks at several inflation gauges; it targets HICP, which rose 3.2% year-over-year in March and slowed slightly from its year-over-year pace of 3.4% a month ago. The HICP steps inflation down to 2.7% over six months but then inflation rises at a 3.9% annual rate over three months, not what the Bank of England was looking or hoping for. The CPIH is 3.7% year-over-year, down to 3.3% at an annual rate over six months and up to an even worse 4.4% over three months. The core CPIH that excludes food, energy, alcohol, and tobacco, pretty much all things necessary or fun in life, rose by 4.7% over 12 months, cooled to 3.7% over six months, but then ticked up to 3.8% at an annual rate over three months.

Inflation makes progress, but not reliably enough The bottom line is that inflation, as represented by either six-month or three-month inflation rates, is generally lower than it was over 12 months ago, indicating ongoing progress on the inflation front. However, the progress isn't as substantial as the Bank of England would like to see; there's some backtracking over three months compared to six months that's not what monetary policy is looking for to gain confidence that inflation will continue to fall toward target.

Diffusion results are mixed Sequential diffusion- Diffusion calculations applied to the categories in the table showed an inflation over 12 months that exhibits diffusion of 23% compared to inflation rates of 12-months ago. The diffusion measure is the percentage of categories where inflation is accelerating period-to-period. Over six months, diffusion falls to 7.7%. HICP inflation on that comparison fell to 2.7% from 3.2%. The diffusion calculation comes from comparing the inflation rate in each category over six months to the same category over 12 months. If the inflation rate is higher over six months than over 12 months, we count it as acceleration. Acceleration was quite rare over six months, occurring only for housing and household expenditures. However, over three months with the HICP rising to 3.9% compared to 2.7% over six months, diffusion jumped from 7.7% to 61.5%. Being above 50% is critical because it means inflation is accelerating in more categories than it is decelerating and that tends to add more authenticity to the acceleration of inflation over three months. It tells us that the acceleration was not just because of a few rogue categories or several large increases in categories that had a high weight, but rather it's something that's broad-based.

Monthly diffusion- Monthly data are more lenient on the diffusion front. In March diffusion is only 38.5% with the month-to-month gain of 0.4%, below a 0.5% rise in February. Inflation is accelerating in March in only 38.5% of the categories. However, in February inflation rose 0.5% compared to 0.1% in January and inflation accelerated in 61.5% of the categories, clearly over half of them. In January with that low inflation print of 0.1%, inflation accelerated in only 30.8% of the categories. Over the last three months, the diffusion data were quite good for two months and moderately bad for one of them. However, when we go back to the table to look at the three-month changes compared to six-month changes, the BOE has that high 61.5% diffusion number staring us in the face.
by:Robert Brusca
|in:Economy in Brief
Global| Apr 16 2024
ZEW Indexes Edge Higher; But What Does It All Mean?
The ZEW survey improved as U.S., German and EMU current conditions and macroeconomic expectations (where surveyed) all increased on a month-to-month basis.

Table 1 summarizes the shift with the TEXT reflecting month-to-month changes. On that basis, there were improvements (increased strength) in 15 of 16 surveyed metrics. However, the text COLOR reflects the relative value of the underlying queue ranking series. Only two queue rankings in the table, the U.S. economic situation and German economic expectations in April are above their respective historic medians on data back to 1992 (and, hence, print black in the table). This means most series are still quite weak and, while improving month-to-month, still emerging from sub-normal conditions.
by:Robert Brusca
|in:Economy in Brief
Europe| Apr 15 2024
A Confusing Picture of EMU Production Trends
The chart shows that European Monetary Union industrial production in manufacturing has been declining across sectors on a year-over-year basis for quite some time. Intermediate goods output declines extended back to April 2022; for consumer goods the declines occurred early in 2023 and have persisted; for capital goods the declines occurred around July 2023 and with one spike reversal the declines have come back vigorously. Capital goods output is currently showing the deepest year-on-year decline in output of any manufacturing sector. The annual trends are clear and quite negative. However, the short-term trends are different, much more optimistic.

Sequential growth rates in IP From 12-months to six-months to three-months, EMU output excluding construction shows a turnaround in progress. Output falls 7.1% over 12 months, falls at a 2.8% annual rate over six months, and falls at just a 2.4% annual rate over three months as trends make steady improvement. Sequentially from 12-month industrial production is showing signs of diminished declines. This trend holds for manufacturing as well where output declines at 7.5% over 12 months, while over three months and six months the pace of decline is reduced to under 1%. We see improvement in two of three sectors as well. Consumer goods output echoes this improvement with year-over-year decline in output at 6.3%, a six-month decline at a 4.2% annual rate, and a three-month decline at a 2.3% annual rate. Intermediate goods show output is gaining momentum culminating in an output increase over three months. Twelve-month intermediate goods output falls by 2.9%, then rises at a 0.4% pace over six months, and then increases at an annual rate of 6.3% over three months. The fly in the ointment for short-term trends in manufacturing is capital goods. Capital goods output declines at a 9.7% annual rate over 12 months; over six months it continues to decline at a rapid pace although slightly diminished, falling at a 9.1% annual decline rate, and then over three months, the rate of decline accelerates sharply to -17%. These trends create a confusing picture for output where there continues to be long-term weakness punctuated by short-term improvement in consumer and intermediate goods but held back by ongoing and severe weakness in capital goods output.

On a quarter-to-date basis (QTD), weakness dominates the overall statistics with a 6.8% annual rate decline in eurozone output excluding construction. Manufacturing is even more severely crimped with a decline at an 11.5% annual rate. The manufacturing result is driven by a 34.7% annual rate decline in the output of capital goods even though intermediate goods output increases at a 7.3% annual rate and consumer goods output falls at only a 0.5% annual rate. In the quarter-to-date, manufacturing trends are weak but also are represented by considerable variety.

Country patterns in manufacturing Across 13 of the earliest members of the European Monetary Union in February, we see manufacturing declines in only three: Belgium, Spain, and Greece. In January, eight countries show declines in output. In December, only four showed declines; those included Germany, Finland, Spain, and Portugal. Quarterly trends across countries show some signs of progress. Ten countries showed declines in industrial production over 12 months; that count was reduced to nine countries over six months and reduced further to five countries over three months. The median result across these countries is for a decline in output of 2.4% over 12 months, a decline of 2% output at an annual rate over six months and an increase in output at a 1.6% annual rate over three months. The country level data support a more optimistic reading of trends. Even so, the quarter-to-date comparisons eight of these thirteen countries with output declining in the first quarter.
by:Robert Brusca
|in:Economy in Brief
Japan| Apr 12 2024
Japan's IP Weakens Further
Japanese economic data have been soft. However, industrial production has been weaker than many of the other reports, and weaker than the softness indicated by the manufacturing PMI. This month the preliminary report on Japanese industrial production has been revised to show even more weakness. Japan's industrial sector shows an extremely weak progression looking at its pattern of growth over 12 months to six-months to three-months. The downturn in manufacturing is intensifying.

The weakness in manufacturing is generally weaker than what we see in other reports as well. While there's been softness in surveys like the economy watchers report, and in Japanese retail sales, the industrial sector is showing sharply weaker conditions, and this is occurring even at a time when the yen exchange rate is weakening and improving Japan's competitiveness.

The weakness in industrial production does track the weakness in Japan’s core orders that have been showing contraction for all of 2023 and into 2024. Japan’s production was down by 1.6% over the previous 12 months; now it is falling by 6.7% over the most recent 12 months. Sequential growth rates tell us that the drop in production is accelerating across major manufacturing categories. This weakness is not an isolated result.
by:Robert Brusca
|in:Economy in Brief
Global| Apr 11 2024
Global Money Supply Trends Edge Slowly Back Toward Flat Growth Except for Japan
The European Central Bank met today and held its policies steady. Markets are looking ahead to the June meeting where they expect there will be a rate reduction. If you read the statements from the ECB, you may have had a strange sense of Deja vu because you're getting basically the same communication out of the ECB that we've seen from the U.S. Federal Reserve. The ECB continues to say that it has interest rates in a high enough position to deal with their current inflation risks and this is the exact same approach that's been taken by the Federal Reserve – even as inflation has been rising. In the Federal Reserve minutes released yesterday, in fact, the Fed went on to say how its policy is well positioned to deal with any risks in the economy. It points out that it's prepared to leave interest rates in this restrictive area for longer or it's prepared to cut rates if that's what it takes. However, the Fed stops there; it makes no direct mention that it's also prepared to raise rates if that's what's required.

U.S. vs. EMU comparison- Inflation in the European Monetary Union appears to be more contained than inflation in the U.S., where it has recently kicked up its heels as EMU inflation has slid lower. In the U.S., core services inflation rises at a 6.8% annual rate over three months and at a pace of over 5% over 12 months. The core services measure in the U.S. is 70% of the core measure so it's hard to ignore. But, so far, Fed communications have managed to do just that. For now, the communications we're getting from the Federal Reserve and from the ECB seem to be highly similar although I question whether the monetary developments and the inflation risks in the two areas are anything like the same.

EMU conditions Nominal money and credit- Over 12 months money supply in the monetary union is falling by 0.7% on the M2 measure. Credit to residents is falling at a 0.1% pace and private credit is unchanged. Comparing the growth metrics for money and credit to their growth rates over two and three years, both money and credit are showing a slowing pace. Flipping the comparison forward to look at the 12-month growth rate against the six-month and three-month growth rates, reveals a slight difference. On this forward-looking path, M2 is starting to accelerate in the monetary union while the credit measures are still flat or weakening.

Real money and credit- If we reassess these measures for inflation, the growth rate of real money in EMU is down 3.2% over the last year, with credit to residents down by 2.6% and private credit down by 2.6%. These are the same or slower rates of reduction that the monetary union reports over two years and three years. Comparing the year-over-year results to the annual rates over six months and three months, we see less real deterioration in terms of money supply, we see, at least over three months, greater deterioration in the use of real credit in terms of either credit to residents or private credit. Real credit use in the EMU is not being stimulated.

Monetary policy ahead: U.S. and U.K.- The U.S. and the U.K. report declines in their respective money supply measures over 12 months. These declines represent increased weakening compared to the path over two and three years. However, flipping the comparison forward in the shorter time horizons, we see the money growth in both the U.S. and the U.K. starting to pick up. The U.K. has positive money growth of 1.4% at an annual rate over three months. The U.S. has positive a growth of 1.8% at an annual rate over three months. Expressed in real terms, the U.S. and the U.K. show less monetary contraction over 12 months than over two years and they show a declining rate of contraction over six months and three months compared to 12-months. On all these measures, we're seeing money supply move to either a less contractive phase or to a more expansive phase in terms of the nominal numbers.

Japan- Of course, the country that's different than all of these is Japan. Japan logs positive growth rates and actually fairly steady growth rates. If we look at annual rates spanning three years to three months, the growth rates on those various horizons vary only from 2.3% to 2.9%. That is quite a bit of monetary growth stability. In Japan, money growth expressed in real terms is down by 0.3% over 12 months which is slightly less contraction than it logged over the last two years; however, over a six-month and three-month horizon, real monetary growth picks up to 0.2% over six months and finally to a 2.4% annual rate over three months.

Global trends After logging a huge boom in money supply growth during the pandemic period, money supply has contracted in money center countries, except for Japan, although all countries have showed some degree of contraction when money growth is measured in real terms. Since then, there has been a turn around with more stimulus creeping into the picture. In the European Monetary Union, the use of credit continues to lag behind the stimulus from money growth and economic growth continues to be weak.
by:Robert Brusca
|in:Economy in Brief
Sweden| Apr 10 2024
Sweden’s IP Falls on the Month and Year to Year
Sweden's industrial production has followed a somewhat chaotic path. Its performance over 12 months is clear: IP production excluding construction declined by 2.5%; manufacturing industrial production is down 2.8% over 12 months. The various categories of motor vehicle production, intermediate goods, and investment goods all show declines year-over-year. The only exception is that consumer nondurables show an increase of 2.6% over the last 12 months. The rebound in consumer nondurables owes to substantial strength logged in December and January; that strength had been preceded by a deep decline in November.

Sequential growth rates for industrial production hint at improvement with a 2.5% drop over 12 months replicated by a 2.5% annual rate drop over six months and then followed by a 2% annual rate increase over three months. Manufacturing follows the same pattern with a 2.8% decline over 12 months, a 2.7% decline over six months and a gain of 0.8% annualized over three months. Motor vehicle production and investment goods output chart more erratic paths and end with double-digit contracting annual growth rates over three months. Intermediate goods also have a bit of a chaotic path with declines over 12 months, a bigger decline over six months and then an increase over three months. Consumer nondurables show increases on all horizons culminating in a 56% annual rate increase over three months - quite stunning.

Orders reflect a bit of optimism with total orders falling 2.2% over 12 months, declining at a 3.8% annual rate over six months but then rising by 1.2% over three months. Domestic orders turn to a path of improvement with the 12-month decline of 8.3% in orders, a 0.8% annual rate increase over six months and a much stronger 7% annual rate rise over three months. That part of this report is encouraging. However, foreign orders are still transitioning. Over 12 months foreign orders rise by 1.9%, but then over six months they fall at a 6.6% annual rate and over three months they fall at a 1.6% annual rate.

In the quarter-to-date, overall IP is rising at a 2.4% annual rate. Manufacturing production is rising at a 5% annual rate. Motor vehicle production and intermediate goods production are both falling at a growth rate of 7% to 8% annualized. Investment goods output increases at a 2.3% annual rate and consumer nondurables output logs a nearly 20% annual rate rise to round out the production data. Orders are considerably more tempered with total orders declining in double digits, domestic orders declining, and foreign orders declining - both of them- at double digit rates, as well. Foreign orders are falling much faster than domestic orders and that's not surprising because growth throughout Europe has been challenged.
by:Robert Brusca
|in:Economy in Brief
Japan| Apr 09 2024
Fed Economy Watchers Index Eases
Japan's Economy Watchers index eased in March, falling to 49.8 from 51.3 in February. The index indicates the slightest contraction underway in March, as well as a step down from its February reading. The future index also edged lower in March, but it continues to point to expansion (or expected future improvement) with a 51.2 diffusion reading. This is weaker than the 53.0 reading in February, but it’s above 50, indicating expansion. The assessment of current employment situation in March strengthened slightly to 52.5 from 52.2 in February. Both employment readings show modest net advances for employment since the diffusion readings are above 50.

Current index- The current index shows a slew of declines over three months, six months, and 12 months. Housing is an exception over all horizons while employment is an exception over six months. Still, diffusion values are above 50 in 5 of 9 current components, but diffusion is below 50 for the headline. That means most components are showing expansion; the headline is just a few ticks below signaling static growth conditions. At the far right, the column ‘queue standing’ is presented. These metrics are different; they rank the diffusion data over all diffusion values back to March 2002. On the queue standing data, any value above 50% is above its median on that timeline. Note that all current readings are above their respective medians except employment (40.7%).

Future index- The future reading shows a decline in diffusion month-to-month in March, but across components there is more weakening compared to February values (8 of 9). In January, all components improved as well as the headline, except for services. Over three months and six months, three components weakened month-to-month (eating and drinking places, services, and employment). In addition, over 3-month manufacturing weakened. All components and the headline weakened over 12 months. The diffusion values in March find the future components largely over 50 (6) compared to a few (3) below 50. Most industries see future improvement; the exceptions are for housing, manufacturing, and for employment (diffusion below 50 in March). The queue standings for the future index show housing and employment below the median value of ‘50%.’ Employment is below a queue ranking of 50% in the current reading as well as in the future reading, not a good development. At least the current employment diffusion reading is still above 50% (52.5).

In Japan’s Tankan report manufacturing is the bellwether. For the Economy Watchers, it may be ominous that manufacturing has a current diffusion value at 47.8, and a queue standing only at its 54th percentile. The future index for manufacturing is also below 50 (49.4) but with a firmer-looking queue standing in its 62nd percentile. In contrast, nonmanufacturing readings are above 50 with 70th to 80th percentile standings. But these are not Japan’s bellwethers in the Tankan. The Tankan also focuses on the performance of large firms, a division we do not see here.

The chart shows current future and current employment readings coalescing around a diffusion value of 50 (unchanged output or employment). ‘Unchanged’ has a relatively high queue standing back to 2003 judging from the standing of the current headline. It is hard to get a clear reading on momentum from the chart. For now, Japan’s growth and outlook are adequate and expanding. Conditions are largely better than they have been. But when the headline reading of diffusion at 49.8 has a queue standing in its 68th percentile, you know the comparison is with a weak history. The same is true for the future readings. The Economy Watchers index may be adequate, but it is not impressive in March.
by:Robert Brusca
|in:Economy in Brief
Germany| Apr 08 2024
German IP Shows Some Push
German industrial production had revived in the last two months, rising by 2.1% month-to-month in February after rising by 1.3% in January. December production had fallen by 2% month-to-month. The upshot is that the 12-month growth rate for production is still showing a decline of 4.8%; over six months, the change in production shows a gain of 0.4% at an annual rate, while over three months, it moves up to 5.6% at an annual rate - quite a strong pace. Overall production in the quarter-to-date is rising at a 5% annual rate. Taking a much more distant benchmark, we compare the level of output today to what it was in January 2020 before COVID struck and find it's still lower by 8%. This is very definitely a short-term revival as the longer-term trends are still weak. The chart explores the year-over-year growth rates by sector for German output.

Output by sector Output by sector shows gains in each sector in February and gains in two of three sectors in January, the exception being capital goods where a 1.5% gain in February is compared to a 1.5% drop in January. All three sectors, consumer goods, capital goods, and intermediate goods show declines in December. The sequential growth rates that compare the annual rate of growth over 12 months to six months to three months find consumer goods output ramping up at an extremely strong pace from -1.8% over 12 months to a 21% annual rate over three months. Capital goods output shows some improvement, but it then runs out of gas; capital goods output is down at a 7.6% annual rate over 12 months; that's reduced to 4.5% annual rate drop over six months but then worsens ever-so-slightly to a 4.9% drop over three months. Intermediate goods get back on-theme with sequential acceleration in output, progressing from a -4.6% growth rate over 12 months, to a +6.5% annual rate over three months.

Orders, sales, PMI Manufacturing output, orders, and real sales showed increases in February, but both sales and orders declined sharply in January, after having increased in December. Manufacturing output is up for two months in a row. Germany's manufacturing PMI rose in January, but it sank back in February. Manufacturing output is accelerating. Real manufacturing orders are also showing a steady progress higher, although all of their growth rates are still negative. Meanwhile, real sales show contractions over three months, six months and 12 months; the three-month and six-month contractions are larger than the 12-month contraction. The bottom line is that manufacturing output falls into line showing sequential gains, but orders show declines amid sequential improvement, and the real sales lag behind those other gauges.

Other surveys of Manufacturing and Industry Other manufacturing surveys tell a mixed tale of the last three months. The ZEW survey shows conditions worsening from December, in January and February. The IFO manufacturing gauge shows slight improvements on that timeline; IFO manufacturing expectations also show a slight step up. However, the EU Commission's industry survey shows a progression of deeper weakness. Viewed sequentially, the ZEW survey shows steady erosion from 12-months to six-months with most of that 12- to 6-month deterioration still in-place over three months. The IFO manufacturing gauge weakens sequentially as does the IFO manufacturing expectations reading. The EU Commission index weakens progressively from 12-months to six-months to three-months.

IP in other Europe Industrial gauges elsewhere in Europe are up to date for Portugal, Spain, France, and Norway. Each of them shows an increase in February compared to January. However, each of those countries also shows a decrease month-to-month in January compared to December. And in December, half of the countries show declines and half of them show increases month-to-month. The experience across Europe obviously has been uneven. Sequential growth rates for industrial production also are uneven. Portugal has an uneven pattern. Spain shows acceleration along with Norway. There is a deteriorating pattern for France. Once again it's a mixed bag of results so we're unable to characterize Europe as doing anything as a whole. European economies still seem to be responding according to their individual circumstances. In the table, of course, Germany, Portugal, Spain, and France are all European Monetary Union members while Norway is not- but even among the monetary union members, we're not seeing the same patterns.

Q-T-D Quarter-to-date (QTD), Germany shows strong results with overall production rising 5% at an annual rate and only capital goods showing a decline on a Q-T-D basis. Portugal shows a Q-T-D gain in output of 7.4% annualized. Spain logs 13.7% with Norway showing a 1.5% gain. France shows a decline in industrial production on Q-T-D basis with a -3% annual rate reported.

The Post-Covid wrap-up Post-COVID has been a difficult time for Germany and for Europe. Industrial production in Germany is lower by 8% compared to January 2020 and all the sectors are lower. Manufacturing output in Germany is lower; real manufacturing orders and real sales are lower as well. The indicators from ZEW, the two from the IFO and the EU Commission survey all are lower compared to the January 2020 values. Industrial production across Europe is weaker compared to January 2020 except for Spain showing industrial production stronger by 2.3%. Norway is weaker by only 0.8%, fairly close to unchanged on that timeline.
by:Robert Brusca
|in:Economy in Brief
Global| Apr 04 2024
Gradual Improving Trends for MFG and Services PMIs; Is the Global Economy Out of the Woods?
The monthly view: The S&P composite PMIs in March show some continuing but slow improvement. The average for the 24 countries listed on the table moves up to 52.4 in March from 52.0 in February and 51.5 in January. The median moves up to 52.7 in March from 51.3 in February and 50.7 in January. Both the mean and the median progressions show ongoing improvement. Statistical agreement is a beautiful thing. The number of jurisdictions showing composite PMI values below 50 numbered 11 in January, fell to 9 in February, and to six in March. Fewer countries listed in this table are showing overall declining economic activity. In addition to that, few are showing a slowing tendency. Month-to-month changes show only 40% were slowing in January, only 32% were slowing in February, and only 44% of the reporters slowed in March compared to February. The monthly changes are constructive but not dramatic.

Sequential profile: The sequential changes look at 12-month, to six-month, to three-month changes; they show that averages have risen from 51.6 for the overall, to 51.3 over six months - slightly weaker- and then advancing to 52.0 over three months. The median over 12 months is 51.7, that slips to 50.7 over six months and recovers to 51.8 over three months, just slightly above the 12-month average. Neither the average nor the median shows a steady progression towards improvement, but both show a slightly better reading over three months than over 12 months although the margins of improvement are small. The number of jurisdictions showing declining activity over 12 months is 8, that moves up to 10 over six months and down to 7 over three months. The number of jurisdictions growing slower was over half for 12-months and six-months; over 12 months at 65% slower, and even higher proportion of 78.3% showed slowing over six months compared to 12 months. Over three months, the proportion slowing pulls back sharply to only 34.8%. We see in these trends both the tendency for the PMI to show fewer declines and for the breadth of weakness to pull back over the past year.

Queue standing- These improvements have had an impact on the queue standings as well. The average queue standing is now at 53.8% with the median at 55.1%. The medians for the composite PMIs are above 50% which means they're above their median values over the last four years. Out of the 24 reporters, only 11 jurisdictions show PMI standings below 50 which means below their median.

The Weakest vs. the Strongest- The weakest standings in the table in March are standings in the 20th -percentile. Qatar, for example, registers a 20.4 percentile standing. Nigeria is at a 24.5 percentile standing. Germany has a 28.6 percentile standing, with France at a 30.6 percentile standing. The European Monetary Union has a 46.9 percentile standing. The United States has a 42.9 percentile standing. These data suggest that the improvement is not being driven by the large-developed economies. The highest percentile standing in the table belongs to India at the 98th percentile. Brazil has an 81.6 percentile standing. UAE reports an 87.8 percentile standing. Singapore has a 75.5 percentile standing and Japan notches a 73.5 percentile standing.
by:Robert Brusca
|in:Economy in Brief
Europe| Apr 03 2024
With the Unemployment Rate at an All-Time EMU Low, the ECB Prepares to Cut Rates As It Continues to Overshoot Its Inflation Target
Just the facts ma’am- Inflation has overshot the European Central Bank's target (of 2%) for 33 months in a row. Now, with the unemployment rate in the Monetary Union at 6.5%, the lowest level it's seen since the Monetary Union was formed, the ECB is preparing to cut rates. REALLY!!

Curiouser and curiouser- I cannot stress enough what a curious situation this is, especially because the ECB, unlike the Federal Reserve, has a mandate that focuses only on inflation and has no reference to growth or to full employment or the unemployment rate.

Alice in blunderland? It's as though central bankers have stepped through the looking glass and found themselves in a world quite different from the one, they used to inhabit. Once, their principal responsibility was price stability. Suddenly, they seem far more infatuated with preserving low rates of unemployment that in the past proved to be (1) elusive, (2) sustainable, and (3) even dangerous, to pursue. “I was so much older then, I’m younger than that now?” (Dylan excerpt)

A new low in unemployment or policy judgement? The unemployment rate in the monetary union has been at 6.5% in 11 of the last 12 months. This is the lowest unemployment rate the monetary union has experienced in its existence. In October 2023, there was a hiccup in which the unemployment rate moved up to 6.6% for one month and then it moved back down to 6.5% - hence 11 out of 12 months at 6.5%- hic!

A festive labor market for all…almost all The table produces statistics for 12 of the oldest EMU members. It shows unemployment rate data ranked from 1994 to date. The unemployment rates for these twelve members are below their medians for every single member except for tiny Luxembourg whose unemployment rate stands at its 78.8 percentile and has been higher only about 21% of the time. By contrast, the monetary union has never seen an unemployment rate lower than this. Belgium has seen an unemployment rate lower than its current 5.5% only 7.6% of the time. Ireland has seen its unemployment rate lower than its 4.2% only 5.5% of the time. France has seen its unemployment rate lower than its 7.4% only 8.1% of the time… and so on. Unemployment rates across the monetary union, where they are not low in absolute values, they are low relative to each country's historic experience. For example, Greece has an 11% unemployment rate; it has been lower than that only 28.5% of the time. Spain's unemployment rate at 11.5% has been lower than that only about 24.4% of the time.
by:Robert Brusca
|in:Economy in Brief