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

Global| Jan 23 2026
S&P Flash PMIs Rebound But Emit No Clear Signal
The S&P PMIs for January show flash readings that indicate broadly stronger conditions across the early reporters in this table. Exceptions are the European Monetary Union as a whole with its composite reading weaker and France with its composite reading weaker, but Germany, the United Kingdom, Japan, Australia, India, and the United States all have composite readings that are stronger month-to-month in January. With these eight countries, there are 24 readings in each period, three for each country: a composite, one for manufacturing, and one for services. Among these 24 readings, only five of them were weaker month-to-month in January. Of course, this follows a December when only 6 of the readings were stronger month-to-month.

The sequential readings, that we calculate only off hard data (which means that calculations are done from December backward) are still mixed. Substantially weaker conditions period-to-period are reported comparing three-months to six-months. Over three months, only nine of the 24 readings are stronger whereas over six months only one of the 24 readings is weaker when compared to the 12-month average. Over 12 months, the average is stronger than it was one-year ago in 15 of the 24 readings.

Only the United States and France have service sectors that are below their medians over this period back to 2022. Only France and India have composite readings that are below their respective medians over this period. But by comparison, there are very strong composite readings as well. There is a 91-percentile standing on the composite in Australia, an 87-percentile standing in Japan and the United Kingdom. The German composite has a 79-percentile standing.

The recent data have been running sporadically hot and cold, making it difficult to make sense out of what's happening. But broadly, it's clear that the PMIs in the European Monetary Union have been working their way higher and this is the general theme.

For the 8 reporters in the table back to January 2022, all of them except India show weaker manufacturing readings in January 2026 than what they showed in January 2022. But January 2022 was, of course, part of the COVID recovery move. Manufacturing in the European Monetary Union slipped from its high point over this period to its low point around mid-2023.
by:Robert Brusca
|in:Economy in Brief
Belgium| Jan 22 2026
Belgian Consumer Confidence Up and Strong; Fear of Unemployment at 35-Year Low! Is That Possible?
The National Bank of Belgium index for January 2026 rose to +4 from -1 in December, stronger than its November 2025 reading of +2. The survey value is exceptionally strong, lying in the top 6% of all observations back to 1991, even as the survey contains significant variations that range from strong to quite weak across its various components. What is most notable is that the index itself is extremely high-ranking; the current situation appraisal is also quite high-ranking; and, that the forecast for unemployment embedded in this survey is at a 35-year low. Considering current circumstances, against the events of the last 35 years, that's a rather remarkable finding especially considering the world situation.

The times, they are a changin’ was Dylan 50 years early? These have been remarkable times in a number of different ways with a clear transition from the circumstances of the post-war period under way. The solidarity of the NATO alliance is clearly in a situation in flux, revealed since Russia invaded Ukraine. Prior to that, the Europeans had resisted putting more money into the NATO pot as the United States had been frantically asking them while it funded most of the security umbrella. Now, in the wake of these new events, and with the changes to the global stage wrought by climate shifting, the U.S. finds Greenland to be a more important piece on the geopolitical chess board and wants to have more say there in order to protect its own flank as Arctic ice packs recede. This is after a period when NATO basically failed to engage in the front-line protections of its own doorstep that the U.S. had thought were necessary. Not surprisingly, the U.S. found that whole episode unsatisfactory and is now reluctant to give up control to NATO of what it regards as the protection of its own back door for the area around Greenland. But at last, Europe and the U.S. appear to have a deal or the makings of one, so, stay tuned. Maybe all civility is not lost.

Geopolitical shifts meld with economic issues to change the landscape Geopolitical shifts are part of the problem because geopolitics and economics help shape one another. And there has been a great deal of economic turmoil as well. The U.S., after reassessing the Post War order, is bringing back to life tariffs, in order to try to get economic leverage after running 33 consecutive years of current account deficits under what people want to call a free trade system. The U.S. finds itself with a still very overvalued dollar and in a situation where its current account deficits are poised to continue to run high and perhaps get higher. Economists say tariffs are not the solution, but maybe they ARE the wake-up call that will lead to a solution? Europeans have also shifted to embracing a larger and larger government sector and ever larger fiscal deficits and more fiscal debt while absorbing migrants. This is constraining its ability to have any kind of a flexible macroeconomic policy and is a severe problem already for the U.K. and France. And these changes are wreaking havoc with what has been a very solid post-war Atlantic alliance.

Views change But the changes that the U.S. has pushed on to the system from its geopolitical adventurism to its use of tariffs and other strong rhetorical comments have led economists to focus on the elevation of uncertainty in the economic system. Elevating uncertainty has an adverse impact on the economy and on growth. I mentioned this with the obvious caveat that this warning by economists seems to have been completely wrong. U.S. growth has turned out to be quite resilient and even strong. It is not the only adamant position that has proved to be wrong and malleable. Despite the reality of climate change, the view that once took carbon as the main and unequivocal climate change agent, itself is shifting. Opposition to carbon has dwindled, more as the U.S. is embracing nuclear power. Artificial intelligence is becoming a strong bet for stronger growth in the future, and this explains why there have been so many shifting views on energy since artificial intelligence requires massive amounts of energy and would make it impossible to make progress on carbon and to push ahead with the AI agenda at the same time. So, instead of delaying AI, the view on carbon had to go. So much for ‘science.’

Why are Belgians so satisfied? The finding that in Belgium consumer confidence has risen sharply in this environment and fears of unemployment are the lowest they've been in 35 years is another shocking development in this pantheon of incredible and shocking changes. As the above discussion points out, a lot is changing and NATO is at odds with the U.S., its lynchpin. Yet, there is no clear increase in uncertainty in Belgium, while they maybe more in Brussels.

The Belgian Survey: strong despite waffles Belgians do not read the economic situation over the next 12 months as that strong at a reading of -29 on the survey; it has weakened over the last few months, and the economic situation assessment is only at its 8.3 percentile, an extremely weak standing. Price trends are the opposite; they have eased somewhat in the recent months, but over the next 12 months the assessment still has a top 14-percentile evaluation. It is in this context that the unemployment forecast, which is the lowest in 35 years, emerges as surprising. The environment to make major household purchases over the next 12 months is only a mid-range at a 45.7 percentile standing. And people rate their financial situation over the next 12 months slightly better than at the end of last year but at only a 34.2 percentile standing. However, the appraisal of the current situation moved up sharply in January and has a 97.7 percentile standing, which is extremely strong.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Jan 21 2026
U.K. CBI Industrial Survey Flags Trouble Ahead
The CBI (Confederation of British Industry) Industrial Trends Survey showed slight improvement in orders in January 2026 as the survey reading rose to -30 on a net basis from -32 in December and -37 in November. However, the 12-month average of the order series is -31 and so the improvement compared to conditions that prevailed over the last 12 months is not significant.

Export orders, on the other hand, deteriorated to -30 in January from -27 in December although that reading was slightly better than the -31 print in November. Once again, the -30 reading for January is only slightly better than the 12-month average of -32.

Stock-building slowed in January at +3 compared to +8 in December and +16 in November. That, actually, could be good news suggesting that industries are getting control of their inventories at a time when sales have been weak.

Looking ahead for output volume over the next three months improved to -14 in January from -17 in December and -30 in November, a substantial pick up over this period. But the reading for January at -14 is still slightly more negative than the 12-month average of -11.

The unequivocally stronger reading in the table, unfortunately, is for prices with average prices over the next three months at a +29 net reading, up from +19 in December and up from +7 in November. The reading of +29 in January compares to a 12-month average of +18 indicating a significant pickup compared to conditions that prevailed over the last 12 months.

Evaluating these readings by ranking the queue standings of the net values and data back to 1992 shows total orders have a 20th percentile standing, export orders have a 28.4 percentile standing, while the stocks of finished goods have a 9.8 percentile standing, and expected output - despite its recent improvement - is quite weak with an 8.3 percentile standing. Average prices, on the other hand, are quite strong with a 91.7 percentile standing, indicating that the forces of inflation looking ahead are quite strong despite relatively weak demand and output conditions that are expected.

CBI data compared to annual growth rates in manufacturing and to the manufacturing PMI show rankings actually much better than the CBI survey. The manufacturing PMI has a 53.7 percentile standing that's only on data back over the last four years. The manufacturing production data have a 48.3 percentile standing, which is still very close to its 50-percentile standing, which would be its historic median. So, we have another case here of the accounting data being stronger than the survey data from the CBI. The strength in manufacturing industrial output does not compare favorably with the weakness portrayed in the CBI survey even though the manufacturing data are only up-to-date through November. The CBI data are up-to-date through January. And since CBI data generally show some stability or improvement from November to January, that data time mismatch with industrial production doesn't seem to be the reason for these readings being so vastly different. We’re going to have to keep an eye on other metrics for manufacturing to see which one of these surveys is giving us the best information.

For now, we don't know which of these series is the best and what we're looking at is a CBI series that is touting a great deal of economic weakness and portraying significant increases in prices over the next three months.
by:Robert Brusca
|in:Economy in Brief
Global| Jan 20 2026
ZEW Survey Shows Advancement All Around
The ZEW survey for January showed improvement all around with both economic expectations and macroeconomic conditions showing improvements in the United States, Germany, and the euro area.

The economic situation in January in the euro area improved to a reading of -18.1 from -28.5 in December. In Germany, the reading improved to -72.7 from -81 in December, while in the United States the reading improved to +17.7 from -0.6 in December. The message here clearly is the month-to-month improvement. Still, the January readings leave the assessments of conditions in these three areas as quite different. The percentile-queue standings place each one of these topical readings in their queue of data back to December 1992, expressing the standing in percentile terms. Viewed in this way, the euro area has a 57.2 percentile standing, the U.S. has nearly a 45-percentile standing, while Germany has a 22.6 percentile standing, leaving each of these areas in their own distinctive positions relative to their historic norms. The euro area has a firm and above-median ranking since the reading is above the 50th percentile (where the median is located). The U.S. is slightly weaker than that, with a reading that's marginally below its median. Germany has a reading between the lower quartile and the one-fifth mark of its historic data, branding it as weak.

Macroeconomic expectations find that Germany in January moved up to a positive reading of 59.6 from 45.8 in December. The U.S. also improved, moving up to -3 from -12 in December. The macro-expectations find Germany and the U.S. in very different places with German expectations in an 80.4 percentile of their queue, placing them in the top 20% while the U.S. has a 45-percentile standing, below its historic median and essentially the same relative position as its current situation ranking. In contrast, Germany has a weak current economic assessment versus a stronger expectations assessment.

Inflation expectations weaken across the board in January, with the euro area falling to -7.6 from -4.6 in December, Germany falling to -6.0 from -1.7 and the U.S. falling to 44.2 from 54.9. The ZEW experts see a disinflationary environment, and they see that despite the pickup in current conditions and improved macroeconomic expectations. Expectations in the U.S. have a 61.1 percentile standing; the German and the euro area readings are much weaker and closer together, with the German standing at its 31.2 percentile and the euro area at its 25.8 percentile.

On the back of these expectations, short-term interest rates in the euro area are less weak, with the January reading at -7.7, up from -10.8 in December. The U.S. has a -65.6 reading, stronger than Decembers -73.9. On a ranking basis, the euro area’s short-term rates have a 37.4 percentile standing The U.S. has a 9.3 percentile standing. The interest rate assessment is that short-term rates are going to be modest to lower over the outlook.

Long-term interest rates in Germany and the U.S. weaken slightly in January from December to 44.5 in January for Germany, compared to 49.2 in December, and in the U.S., there is a very modest ‘decimal point’ change to 44.1 in January from 44.9 in December. German long-term rates have a 58.8 percentile standing while the U.S. has rates at about a 50-percentile standing, placing them just about on top of their historic median. Neither one of these expectations has long-term expectations different from historic norms.

Stock market expectations from December to January, however, are little changed and mostly weaker, with the euro area gauge falling to 35.2 from 41.3 in December. The German gauge slips to 35.9 from 36.3 in December. The January gauge for the U.S. is ticking slightly higher to 31.5 January from 30.2 in December. The rankings for the January gauges show the U.S. above its median at a 59.3 percentile mark, the euro area slightly below its median with a 44.9 percentile reading; the German stock market still scores as the weakest at a 39.7 percentile standing.
by:Robert Brusca
|in:Economy in Brief
Europe| Jan 16 2026
Big Four Inflation in EMU 2025-Final
The European Monetary Union has concluded a year of weak-to-moderate growth with inflation largely toeing the line. As always, the inflation picture is more complicated than a simple statement. When we look at inflation, we look at the headline, we look at the core, to make sure that the volatile food & energy elements aren't dominating the index, and then we look across some of the main participants to see if the trend for inflation is shared broadly across the largest countries in the Monetary Union. When we apply those kinds of standards, the grading for the year is reduced. However, based on the headline alone, it was an excellent year for the ECB.

Headline Inflation in 2025 Headline inflation in 2025 rose by 2%, exactly on the target of the European Central Bank. It rose over six months at a 2% annual rate and then concluded the year over the last three months, rising at a 1.6% annual rate with some margin below the target set by the central bank itself.

Country Headline Inflation Trends On a country basis, the performance is not nearly as good. While year-on-year results look pretty good, with Germany at 2%, France at 0.7% and Italy at 1.3%, Spain comes in at 3.1%. So the three largest monetary union economies come in at or below 2% with Spain as a rogue observation. When we look further at the sequence of inflation within the year, we see Germany at 2% over 12 months, rising to 3.1% over 6 months, rising further to 4% over 3 months. Inflation is accelerating at the end of the year even as Germany hits the target! This is something to keep an eye on. For France, the inflation rate also accelerates slightly but stays below the bar of 2% over three months, six months, and 12 months. For Italy, inflation is decelerating from 1.3% over 12 months to -0.3% over six months, and then inflation in Italy is contracting at a 1.9% annual rate over three months. Spanish inflation shows clear trouble with a 3.1% 12-month pace, rising to 4.6% at an annual rate over six months, and rising further to 5.9% at an annual rate over three months.

Core Inflation For core inflation, the Monetary Union’s consolidated numbers are not yet compiled. However, for the four largest economies, we do have core or ex-energy inflation. For Germany, it's inflation excluding energy. On that basis, German inflation is 2.2% over 12 months, it rises to 2.7% over six months, then falls back to a 2% annual pace over three months All-in-all not a bad performance. For France, core inflation is below 2% over 12 months, six months, and three months. In Italy, once again, we see inflation decelerating: Italian inflation is 2% over 12 months - right on the ECB target. It falls to a 1.3% annual rate over six months and then falls further to a 0.3% annual rate over three months. For Spain, the core has another very difficult story for the Monetary Union. Inflation is 2.7% over 12 months, it rises to 3.1% over six months and stays at an annual rate of about 3% over three months. This is too high and it looks stubborn, particularly because it is the core.
by:Robert Brusca
|in:Economy in Brief
Europe| Jan 15 2026
EMU IP – Has the Worm Turned?
Industrial output in the European monetary union rose by 0.7% in November for the second month in a row. Manufacturing output jumped to an increase of 0.9% after rising by 0.3% in October. By sector, output in consumer goods fell by 0.8%, as consumer durables output fell by 1.3%, and consumer nondurables output fell by 0.6%. However, intermediate goods output rose by 0.3% and capital goods output rose by 2.8%.

Sequential trends Sequentially output in the euro area is looking much stronger with the 2.6% gain over 12 months, a 1.2% annual rate gain over six months and at a smashing 7.1% annual rate gain over three months. For manufacturing, the 12-month pace is 12.5%, the rate of change over six months is 0.4% at an annual rate, while over three months, manufacturing output is rising at a 4.1% annual rate.

Component growth Component growth is mixed with consumer goods output overall showing negative growth rates over three months and six months, consumer durables transition from declining growth to positive growth over three months while consumer nondurables show positive growth over 12 months, transitioning to progressively weaker six-month and three-month rates of growth. Intermediate goods, however, show acceleration in train with three-month growth at 6%, up from 1.1% over 12 months, and with capital goods output progressively rising from 3.3% over 12 months, to a 14.5% annual rate over three months.

Quarter-to-date results Today's report is through November; quarter-to-date industrial production is up at a 4.4% annual rate, with manufacturing up at 1.4% annual rate. The total industrial production growth rate has the historic ranking in its 65.5 percentile and manufacturing growth only ranks at its 55th percentile. Only two sectors, consumer durables, and (barely for) intermediate goods are the growth rates below their historic medians which means their rankings are below their respective 50th percentiles.

Country level trends Across countries we still see a great deal of weakness with the median EMU reporter showing an output decline of 0.1%. However, Germany has progressed to show a 2.1% increase in November and has logged three straight months of output increases of over 1%. For Germany the 12-month, to six-month, to three-month growth rates have progressed from an annual rate of 1.2%, to 3.9% over six months, to a 22.1% annual rate over three months.

Mixed results monthly To be sure, there are more outsized declines across countries than there are increases. Spain posts an 8.5% output decline on the month. Luxembourg posts a 6.9% decline, with Greece and Portugal each logging declines of 3%; however, in all these cases, these negative growth rates in November are reversing or blunting positive growth rates in October. Countries logging strong growth rates in November are Germany at 2.1%, Italy at 1.1%, and Ireland at 1.4%. Outside of the monetary union, Sweden has a gain of 6% and Norway a month-to-month gain of 3.2%. Germany, Italy, Greece, and Sweden exhibit accelerating growth from 12-months to six-months, to three-months. Luxembourg and Ireland exhibit steadily decelerating growth.

Stronger results on balance sequentially Output growth rates over 12 months, six months, and three months, across monetary union members show over half of them accelerating over the sequential span within the last year. Monthly data from the monetary union and other European reporters remain somewhat inconsistent; however, it's also true we're coming off a very strong October and so the weak monthly November numbers may not be very meaningful. However, this is still leaving us with what are essentially very strong sequential growth rates, from 12-months to six-months to three-months across this group of countries. On a quarter-to-date basis among the 14 countries in the table, only three are reporting quarter-to-date declines in output in progress. Year-over-year growth rates for these countries show standings below their 50th percentile for only four of them, and for Finland the reading is only technically below 50% at 49.6%.

There's a reasonable case being made for the notion that the European Monetary Union is embarking on a revival especially because it seems to be underpinned by Germany which is showing a very strong last three months, very strong sequential growth rates and has logged in addition to this a firm GDP growth rate, after wallowing in recession.
by:Robert Brusca
|in:Economy in Brief
Finland| Jan 14 2026
Inflation in Finland Continues Dive Below 2%
When inflation fell in the post COVID. Finish inflation slipped easily below the 2% mark and then accelerated rather strongly but continued to remain below 2% most of the time until recently. In September of last year, Finish inflation once again made a strong move below 2%. The harmonized inflation rate over 12 months for Finland is 1.3% in October, 1.5% in November, and 1.7% in December. These are all 12-month, year-over-year gains. From October through November, Finland’s core measure of the HICP also has been below 2%.

In December, Finland's HICP measure kicked up its heels to log a 0.3% gain after rising 0.2% month-to-month in November and falling by 0.5% in October. Among the 9 categories that make up the detailed national CPI that's released at the same time as the HICP, four of the components showed gains less than 0.2% with three components showing gains of 0.6% or more on a monthly basis. This followed a November report in which seven of the nine categories and the national index itself showed month-to-month declines and where 55% of the categories decelerated from October. By comparison, in December 85% of the categories accelerated relative to November, but then given the weak nature of the November report, that's not particularly surprising. October had been another month of extremely disciplined prices with the headline HICP falling by 0.5% month-to-month and with six declines in monthly prices, against accelerations in only 35% of the categories. Clearly Finland has been in a period when inflation has been extremely tempered.

Sequential trends showed that the HICP headline measure is up by only 1.7% over 12 months although it's up at a 5.9% annual rate over six months and then up by only a 0.1% annual rate over three months. Inflation accelerates for 40% of the categories over 12 months compared to 12-months ago, it accelerates over 6 months compared to 12-months for 60% of the categories, and it accelerates over 3 months compared to 6-months only 30% of the categories. The year-over-year and three-month performances shows a great deal of inflation discipline in Finland.

The rankings, or queue standings, of the inflation rates show the headline, which is up 1.7% over 12 months at a 56.1 percentile ranking over that period back to 2001. That places the measure on slightly above its median on data back to 2001. The national index, however, is up by only 0.2% over that span. And it has a 14.3 percentile weight extremely weak among the components in the domestic price index: five of them have rankings above the 50-percentile mark overall on 12-month changes back to 2001. The greatest increases are in health & medical care with a 90.4 percentile standing, recreation & culture prices have an 81.7 percentile standing, communication has 83-percentile standing, education has a 55.2 percentile standing, and food & nonalcoholic beverages are close to the median at a 50.4 percentile standing. The weakest prices on the standing basis are housing, fuel & light at an 8.7 percentile standing and as well as other goods & services at a 5.7 percentile standing.
by:Robert Brusca
|in:Economy in Brief
Japan| Jan 13 2026
Japan’s Economy Watchers Survey in December 2025
Japan’s economy watchers index at year-end weakened slightly, but the future index strengthened slightly to counterbalance the drop-off. The December current index is weaker than it was in October as well, as is the headline for the future index. But the queue, or rank, standings of these indexes show the current index at a 60th percentile standing and a queue standing for the future index at its 70th percentile. Despite the end of year give back, the index headline readings are still, for the most part, firm-to-solid.

The Current Index That is an assessment about the rankings of the December data compared to their respective histories back to end 2004- a twenty-year period. However, in terms of the diffusion values of the index per se, the current index has only two readings above the 50 mark indicating actual expansion. Expansion is the rule in current services industries and in nonmanufacturing, a broader sector dominated by services. Employment and readings for corporations overall both show readings close to neutral with diffusion at 49.2 or better, but still short of 50. Current retail at 46.5 is the weakest sector and shows the second weakest diffusion reading.

The current index standings on employment has a reading below 50%- and that is despite having a diffusion reading near 50 -nearly unchanged employment month-to-month. That diffusion reading for December is a low relative to its own history. The strongest two sectors on rankings are services and eating & drinking places with standings in the 70-percentile range. Apart from the weak employment standing, the weakest rankings are in the range of the lower sixty percentiles with only retailing lower, in its 56.5 percentile, manufacturing at its 61.7 percentile.

The Future Index The Future index has a slightly higher queue standing than the current index as noted above, but it is not vastly different. No future components rankings are below their 50%, but again, employment is weakest with a ranking in its 50th-percentile and with housing in its 53rd percentile. Nonmanufacturing and services have the highest queue standings.

In terms of diffusion readings as opposed to standings, the future index headline is above 50 unlike for the current headline. Six of nine observations in December have future readings in their respective 50.6 percentiles. The weakest future reading, housing, with a 46.2 reading, is followed by retailing and eating & drinking places, each at 49.6. But the above-50 readings ae not strong per-se either. The strongest is the services sector at 52.4, then nonmanufacturing at 51.7, followed by employment at 51.4 (and it has the weakest queue standing among future readings). Corporations have a diffusion reading at 50.9, households at 50.3, and manufacturers at 50.2. And that 50.2 reading for manufacturers has a 70.4 percentile standing.

Always remember that diffusion and the rank standings are different things and very different concepts even though they are both measured as percentages; they can be quite different. Various series have different histories and tendencies. Not too surprisingly the current and future diffusion readings are highly correlated (0.96) while the standings are not so well correlated in December between the current and future (0.37). The correlation I speak about above between diffusion and standing is at 0.20 for the current readings in December but is higher at 0.53 for the December future components.
by:Robert Brusca
|in:Economy in Brief
Switzerland| Jan 12 2026
Swiss Confidence Sags at End-2025
Swiss consumer confidence at end-2025 (in Q4) fell to -34.5 from -32.7 in 2025-Q3. The average level for the confidence reading on data back to 1982 is -16.7 and the current queue standing is 13.9%. The Q4 reading is clearly weak- well below its own average and weaker than this month, less than 15% of the time.

Outlook confidence in Q4 fell to -44.9 from -38.0 in Q3, registering a 15.6 percentile standing. The past confidence reading at -61.2 at end-2025 is down from -43.5 at the end of the third quarter. The standing for this reading is in its 19th percentile. All of these are extremely weak readings.

People provide a job security response in Q4 that eases to -50.1, still well above its historic average of -58.2 for a queue ranking at its 57th percentile.

Personal financial readings are moderate to weak across the board. However, current financial conditions rose to 38.4 in Q4 from 35.2 at the end of Q3 and a queue standing above its median at its 56th percentile. But the outlook for financial conditions is much weaker and also weakened quarter-to-quarter to -31.4 in Q4 from a level of -28.6 in Q3 to a queue ranking in its 8.7 percentile. The evaluation of past financial conditions improved by a very small margin, rising to -38.3 in Q4 from -38.7 in Q3, and to a queue standing at the 11.6 percentile.

The spending environment in Switzerland improved slightly but remained weak, rising to -23.3 in Q4 from -25.5 in Q3 to a standing at their 23.1 percentile standing.

The best part of the report is that the perception of job security is above average, and the current financial situation is above its median. After that, all the individual assessment metrics are weak including overall confidence – everything except assessments for inflation.

On the inflation front, the price outlook is high, rising to a reading of 97.7 in Q4 from 95.8 in Q3 but is still below the second quarter reading at 113.1. The price outlook has a moderately high standing at its 70.5 percentile. This standing is slightly below the standing for prices past which is at 76.3%. The past metric was still rising in the fourth quarter but was weaker than its reading in both Q1 and Q2 of 2025.
by:Robert Brusca
|in:Economy in Brief
Germany| Jan 09 2026
German Industrial Production Perks Up-Surprise!
German industrial production advanced by 0.8% month-to-month in November performing better than had been expected. Consumer goods output fell by 0.3% month-to-month, capital goods output soared with a 4.9% gain, while intermediate goods output fell back by 0.8%.

On the whole, manufacturing output had been expected to be weak. But looking at manufacturing alone, rather than total industrial production, the gain was even stronger at 2.1% month-to-month. Real manufacturing orders in November rose by 5.6%, real sales in manufacturing rose by 2.7%. This is solid performance.

Survey data have been weak and listless However, apart from anecdotal evidence, as monthly data unfold, the kinds of numbers that we have to look at first are various economic surveys that come from diffusion data. The ZEW’s current index was slightly stronger month-to-month at a still very weak -78.7 (net) reading compared to -80 in October although both of those were weaker than the ZEW net September reading of -76.4. IFO manufacturing weakened month-to-month in November at 87.1 compared to 88.1 in October and it was slightly weaker than its September value as well. IFO manufacturing expectations slipped to 94.1 in November from 96.9 in October although expectations were slightly higher than their level in September. The EU Commission index weakened in November to -18.9 from -18.1 in October although there was an improvement from -20.1 in September.

These comparisons show us that the survey data which we had in hand before getting the industrial production reading from Germany had given us a lot of weak readings and a lot of very weak momentum.

Compare survey data to IP data using ranking technique We can compare industrial production data to survey data using two different columns in this table. The first is the queue standing column where we see the industrial production data with rankings mostly in their 50th percentile: intermediate goods have a ranking of 37.7% with construction at 33.4%; they are the weaker exceptions. We rank IP data by sector according to their annual growth rates compared to past growth rates. However, by comparison the survey data (that we rank on levels) range between 12.1% and 29.8%; all of those are very weak readings. No wonder a focus on survey data leads to a weak upcoming assessment of production data. We can also look at a slightly more up-to-date, but shorter ranking, from January 2021. There we see that the industrial production data average rankings from the mid-60th percentile up to the 81.4 percentile for total industrial production. Surveys generally have rankings in the 20th and 30th percentile with the exception of IFO manufacturing expectations which reaches 67.8%, which is a solid reading.
by:Robert Brusca
|in:Economy in Brief
Europe| Jan 08 2026
EU Indexes for EMU Weaken at Year-End
The EU indexes for December 2025 showed slight slippage as the overall index fell to 96.7 from 97.1 in November for the whole of the European Monetary Union. Sectors showed slippage in consumer confidence and retailing; confidence slipped to -13.1 in December from -12.8 in November as the retail rating slipped to -7 in December from -6 in November. The services sector and the industrial sector were each unchanged on the month, with the industrial reading at a net standing of -9 and the services reading at +6. Improving month-to-month was construction where the index rose to a -1 in December from -2 in November.

Queue standings of sectors The queue (or rank) standings for the overall reading as well as the sector readings largely cluster around the lower one-third of the range of values on data back to 1985, where applicable. Retailing and construction are exceptions, with retailing at an above-median standing at a 51.3 percentile and construction at a solid and strong 81.6 percentile standing in December. The weakest reading is for consumer confidence at the 23.1 percentile standing followed by the industrial sector at a 30.5 percentile standing; services check in at a 37.9 percentile standing. The rank standing for the overall monetary union is at 34.4%, just slightly above the bottom one-third mark for all ranked observations over the period.

Country results 18 countries report detail in this survey. Seven of the 18 showed declines in December; this is up substantially from November when five showed declines and compares to October when eight countries showed declines. An unfortunate feature of December is that the headline reading for the monetary union weakens as well as readings for each of the four largest monetary union economies Germany, France, Italy, and Spain.

The two largest monetary union economies, Germany and France, have the weakest rank standings among the BIG4 with Germany at a 15.7 percentile standing and France at a 29.5 percentile standing. Italy and Spain each have standings above the 50% mark placing them above their medians for Italy with a reading of 54.2 percentile, while for Spain it's a 61.2 percentile standing.

Standings across smaller economics Across the remaining monetary union countries, six of the 14 readings are above their 50th percentile, while eight of the 14 are below their 50th percentile. Well, the large countries are experiencing a significant split; the rest of the monetary union appears to be in much the same condition, with approximately half of them performing at above-median conditions and half performing at below-median conditions.

Country stories The chart of the monetary union indexes by sector shows us that there has been little change and little trend in these observations. Across countries Germany has definitely been the weakest country among the BIG4, while Italy has been the strongest. Inflation data have showed inflation beginning to heat up in Spain, and Spain does have the strongest queue standing among the four largest monetary union economies - so that might be something to keep an eye on going forward. Conditions in Germany and France are still quite weak and seem unlikely to force an increase in inflation.

Smaller economies- some specifics And so, the rest of the monetary union economies show tiny Malta, which is hardly a price-maker, has a strong 99.6 percentile standing, followed by 70th percentile standings in Greece and then Lithuania. Portugal and Cyprus have readings in their 60th percentiles. For the most part, these are modest readings but above their medians, of course. Among the weak economies in the rest of the union, the weakest is Belgium with a 16.9 percentile standing, followed by Estonia at a 28.4 percentile standing, Luxembourg at a 32.8 percentile standing, and Austria at a 33-percentile standing. After that, Finland’s standing goes to 37.7 percentile with the Netherlands, Slovakia, and Latvia all with readings in their 40th percentiles indicating moderate undershooting relative to their respective medians.
by:Robert Brusca
|in:Economy in Brief
Global| Jan 07 2026
Inflation in the Euro Area Is Warm but Well-Behaved at Year-End
Inflation in the euro area as 2025 draws to a close has pretty much behaved. The HICP gauge for the European Monetary Union, that's targeted at a pace of 2% is closing the year with a 12-month pace of 2% which is exactly what the ECB is looking for. Success is at hand! Congrats to the ECB!

It’s like the super bowl playoffs: a victory, but more games lie ahead However…oh yes there is almost over an ‘however’ or ‘none-the-less’ or some other insidious phrase inevitably is inserted to introduce a caveat… and that is this: over six months the headline pace is at 2.4% at an annual rate, and over three months the pace is at 2.2% at an annual rate. Still, the year-over-year inflation rate is how central banks normally are judged and it has come in right on target, and the ECB can claim a large measure of victory for that even as it faces the challenge for 2026.

Visiting 2% or setting down roots? At the same time, inflation is only closing in on the 2% target over other horizons. It has not generally proven itself to be stable at 2%, having spent most of its time at a pace above 2% for the past year as the chart shows.

So far so good... The monthly numbers have been encouraging with the December gain in the HICP at 0.2%. Germany logged a gain of 0.1%, month-to-month, France and Italy had gains of 0.2%, while Spain is at 0.4%. Spain, where inflation had been pretty-well contained, has now moved over to the rogue side of the ledger. Spain posted inflation at 3% year-over-year, at a 4.5% annual rate over six months, and at a 5.7% annual rate over three months. Other monetary union countries showed more disciplined patterns. For example, France has a 0.7% gain year-over-year with a 1.2% annual rate gain over six months, and a 1.1% annual rate gain over three months. All of them, of course, are gains well within the ECB's desired result for the union as a whole. Italy shows a tendency toward deflation at a 1.3% HICP gain over 12 months that shifts to a decline of 0.3% at an annual rate over six months, and to a decline of 1.9% at an annual rate over three months. The other troublesome country among the Big-Four economies in EMU is Germany where the 2% headline achievement over 12 months is right on top of the target the ECB seeks; however, it gets there with a 3.1% annual rate increase over six months and a 4% annual rate of increase over three months. Both of those gains, of course, are over the line and indicate accelerating inflation even as German inflation ends the year at 2% and is ‘seemingly’ compliant.

Core inflation is a slightly different animal Germany gives us an early look at inflation excluding energy. Italy and Spain give us core measures to look at early in the year. The December results show ex-energy inflation in Germany at 0.1% month-to-month, Italian core inflation at 0.3%, and Spanish core inflation at 0.2%. This followed a batch of similarly well-behaved numbers in November for these three countries (see Table). The core sequential inflation rates are generally better behaved for these three countries than for their headline rates. Germany's metric excluding energy comes in at 2.2% for the year but it accelerates at a 2.7% pace over six months and then it's back down to 2% over three months. Italy shows a compliant 2% pace over 12 months, then it slides to a 1.5% annualized over six months and slips further to a 0.7% pace over three months, echoing the deflation trend that we see in Italy's headline pace. For Spain, the core also exhibits accelerating inflation trends to join what it reports for the headline as the year-over-year core pace is at 2.6%, the six-month rate steps up to 3.1% annualized, and stays in that neighborhood at a 2.9% annualized rate over three months.
by:Robert Brusca
|in:Economy in Brief