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

France| Mar 27 2026
France: INSEE MFG Weakens as Inflation Expectations Surge
French manufacturing, as assessed by the INSEE survey, fell sharply to a reading of 98.7 in March from February’s 101.7. The industrial sector reading weakened further, having already fallen to 101.7 in February from 105.4 in January. The January reading was the strongest reading since July 2022, as the rebound from COVID had gathered momentum.

Now, events in the Middle East, a dragged-out war in Ukraine, and a long period of inadequate growth in the wake of COVID, and the imposition of Tariffs by the United States are taking a toll on an economy less able to absorb shocks.

Just as inflation had settled down, there is a new oil shock in progress, a result of the attack in Iran, meant to defang it from its nuclear obsessions and its ambitions to dominate geopolitics in the Middle East by supporting various regional militia groups. The European Central Bank had corralled inflation more than controlled it, but now the ECB is more worried about oil and its impact on inflation and is determined not to make ‘the same mistake again’ referring to its procrastinated timeline for raising rates during COVID. Both the BOE and the ECB have said if the war is still in progress at the time of their next meetings, a rate hike is likely.

So, in several ways, it is a different world. In the United States, it is the same old world as the Fed has been uncommunicative about its strategy in the face of war and rising energy prices. The Fed has offered essentially no guidance. But the ECB and BOE have made clear they are not waiting on the Fed this time around.

The French economy’s main industrial indicator has a 25-percentile standing in March, a lower one-quartile ranking. Production expectations slipped to -9.4 in March from -5.7 in February, corresponding to a 37.5 percentile standing. The recent trend and own industrial likely trend both eased on the month, with the overall trend to 23.4 percentile standing and the personal likely trend to a still-above-median 50.9 percentile standing. Industrial respondents see the overall manufacturing situation as worse than their own personal prospect. Is that denial in action or excessive macroeconomic pessimism? That is something to watch for.

Orders and demand as well as foreign orders and demand fell in March. They had also fallen in February relative to January. The March readings show a 40.9 percentile standing for orders and demand against a slightly higher 47.8 percentile standing for foreign orders and demand.

The price survey news is bad. Both the own likely price trend and the manufacturing price level are higher in March and had already moved higher in February relative to January. The price expectations rank in the 74.9 percentile for own likely price trend and at the 66.3 percentile for the manufacturing price level.
by:Robert Brusca
|in:Economy in Brief
Global| Mar 26 2026
Globally Money Supplies Retain Hot Growth
Current global money and credit trends Money supply growth accelerated in February over three months compared to six months in the United States and the United Kingdom. In the EMU, money growth backed down from a 6.3% growth rate over six months to a still hot 5.6% over three months. Japan, as always, was the exception, with money growth sinking to a weak 1.5% over three months from 2.1% over six months. And the Bank of Japan still has its sights on raising rates further and bringing the level of interest rates eventually to a normalized level. In the EMU, credit growth accelerated as private credit grew at a 5.4% pace over three months, up from 5.1% over six months.

Excessive money growth: Money and credit growth are excessive compared to what would seem to be equilibrium conditions. Those conditions right now have economic growth weak, in the region of 1% to 2%, and monetary targets are 2% all around. All of them are being exceeded—at least in terms of core inflation rates.
by:Robert Brusca
|in:Economy in Brief
Germany| Mar 25 2026
German IFO Sinks Even as the Current Reading Improves
The IFO readings for March 2026 show that the all-sector climate fell to -17.9 from -14.9 in February. The current conditions index improved by the smallest amount possible, rising to -2.4 after reaching -2.5 in February. Expectations, however, were clobbered, with the index in March falling to -19.7 after posting a -10.8 reading in February.

This expectations module for businesses in March registers a month-to-month drop of nearly 9 points; it ranks 246th out of 252 monthly changes, marking it as an occurrence that is this bad or worse, only 2.4% of the time (only 7 worse readings in the last 21 years). It's a stunning one-month backtrack in expectations for Germany.

Early reactions and developments We are currently in late March, so the reading reflects some reaction to the Iran war, and the reaction that we see certainly suggests that there is a relatively severe reaction by the business community to this war. Of course, the initial phase went extremely well from the standpoint of the United States and Israel, not from the standpoint of Iran. As the war has gone on, the U.S. and Israel have continued to register extremely successful military operations with very few of their own losses. However, it has also become clear that Iran intends to fight back on the ground and has tried to spread the conflict regionally using its missile capabilities—which appear to be more far-reaching than previously thought. We are left with the impression that Iran is prepared to engage in guerrilla warfare, which would be very difficult for conventional military operation to completely stamp out. The U.S. has resisted a call for boots on the ground although Donald Trump appears to be sending some paratroopers into the region. The U.S. has threatened to take control of Iran’s crown jewel of oil operations, Kharg Island. This threat has been made to counter Iran’s efforts to try to close the Strait of Hormuz, probably its only trump card. The U.S. has issued additional threats against Iran if it doesn't reopen the strait and allow oil traffic to pass again.

These conditions are, in many ways, a worst-case scenario for Europe and certainly a worst-case scenario for China and Japan that are so incredibly dependent on oil imports. Europe gets its oil imports substantially from the Middle East, meaning that those imports have to flow through the Strait of Hormuz. And then there's the embargoed Russian oil. There has been Iranian oil that has been on the market, having slipped through embargoes using clandestine tankers. U.S. actions in Venezuela have shut down the Venezuelan shipments that were substantially to China. All of these moves create a great impact, an impasse from oil scarcity, which has led to rising oil prices even though the U.S. has uncorked its strategic petroleum reserve and has promised to make more supplies available from that source. Unlike during 1973-75, the U.S. sits in the catbird seat.

The oil weapon has been broken out, and at the same time, turnabout has become fair play as the U.S. now has the upper hand on oil as Iran crimped the supply through the Strait of Hormuz. Strangely, much of Europe had said it would opt out of the U.S. plan to reopen the strait, but after a short period of time, 22 countries have now signed on to help unplug this strait.

Beyond oil (...sort of) The IFO survey shows expectations have dropped exceedingly hard in response to these events, with the expectation standings by industry ranging from a high of 16.1% in manufacturing to a low of 3.1% in retailing and 5.8% for services in general. The net diffusion readings for March range from a negative reading of -39.3 in retailing to a negative reading of -13.8 in manufacturing.

The current conditions rankings range from a high percentile standing in its 70.6 percentile for construction to a low standing in its 16.9 percentile for services.

And this is a report that has not given survey respondents a lot of time to see and react to events.
by:Robert Brusca
|in:Economy in Brief
Global| Mar 24 2026
S&P PMIs Show Weaker March; Iran War Disrupts Recovery Process
A Broad Weakening The Standard and Poor’s global PMI data show broad weakness in March compared to February. The early ‘flash’ report provides sector details for seven countries plus the consolidated European Monetary Union reading. For each reporting unit, there are readings for the composite, the manufacturing sector, and services. In March, there was a weakening on a month-to-month basis for every reporter in all sectors except manufacturing. The four manufacturing exceptions were the United States, France, Germany, and the monetary union as a whole. That means India, Australia, Japan, and the United Kingdom recorded weakening in their composite, manufacturing, and services readings in March. Meanwhile, the monetary union, Germany, France, and the U.S. that posted stronger readings in manufacturing were still dominated by weaker readings in services, causing their composites to weaken month-to-month without exception.

A Sudden Weakening These results compare to February when 13 of 24 reporters recorded stronger sector or composite readings month-to-month. In February, the monetary union and Germany reported stronger readings in all three measures—the composite, manufacturing, and services; Japan did the same. January had a much stronger month overall, with increases in most sectors across most reporting units with a few exceptions. France reported weaker services and a weaker composite, the monetary union reported weaker services and a weaker composite, and Germany reported only a weaker services sector. The remaining five reporters recorded stronger readings in all three sectors. The war in Iran has clearly interrupted what had appeared to be a strengthening, though still uneven, economic recovery.

Sequentially Different Patterns Sequential data (3-month, 6-month, and 12-month averages) do not include March since March data are still preliminary. Sequentially, the trends are mixed, with the monetary union and Germany showing weaker conditions over the three months compared to six months, but stronger conditions over six months compared to 12 months for all three sectors The United States also reports weaker conditions over three months compared to six months, and it reports weakening over six months compared to 12 months for services as well. As for manufacturing, although the U.S. services sector is weaker consistently including for 12 months compared to 12 months ago, the United Kingdom and France show strengthening in all three sectors over three months compared to six months and over six months compared to 12 months. Japan shows strengthening on that same basis, except that there's a weakening of services over three months compared to six months.

There is a mixed picture as far as trend is concerned and some areas have been stronger consistently, and others have progressed faster than others. But March has brought weakness across the board.

The Percentile Averages: The queue standings (or rank standings) show and average percentile standing for the composites (unweighted) at 41.7% over all data since January 2022. Manufacturing currently is relatively strong on this comparison with a 66.9 percentile standing. Services are weak with a 30.4 percentile standing.

The Diffusion Average: Based on data since January 2022, the average composite reading for this set of reporters is 51.9. The manufacturing average is 50.0, and the services average is 52.4. So, all rankings are relative to that set of data. Since 2022, France has had the lowest diffusion reading, with a composite average at 49.2—it has been consistently shrinking.

Manufacturing: Manufacturing has been weakest in German, with an average PMI reading of 46.6. However, France, the United Kingdom, Japan, and the EMU also have average manufacturing sector readings below 50, indicating ongoing manufacturing contraction.

Services and Comparisons: Only France has averaged a service sector contraction since January 2022. Over this period, India has had the strongest diffusion readings across all sectors. The U.S. has logged the second-strongest PMI readings in services, manufacturing, and the composite.

The U.S. as a benchmark and sticky conditions: For the U.S., the average has been 52.2 for the composite, 51.0 for manufacturing, and 52.4 for services. Since these are the second-strongest set of readings, it makes clear that the readings for this period have been quite tepid. Whatever recovery was in progress was probably slow and fairly fragile. Central banks had largely brought inflation down and, in some sense, ‘under control,’ but still, not to target. These sticky realities have been dogging policy-makers. It has been a difficult period. Of course, the Russia-Ukraine war dragged on, Hamas attacked Isreal, Iran’s nuclear facilities were destroyed, the Trump tariffs remained in place, and a second attack on Iran—intended to undermine its surviving nuclear ambitions—was launched with a goal to degrade its huge cache of missiles and drones as well.
by:Robert Brusca
|in:Economy in Brief
Belgium| Mar 23 2026
Belgian Consumer on the Edge?
The Belgian consumer may be on the edge of a sudden deterioration based on responses to the National Bank of Belgium Consumer Survey for March. The consumer confidence reading registered at -6 in March compared to +1 in February. And on data back to 1991, this gives the consumer confidence metric a ranking in its 53rd percentile, slightly above the median for this span. For ranked data, the median occurs at the 50th percentile.

However, the response by consumers to the current situation appraisal gives them an extremely high 94.9 percentile ranking which suggests that the Belgian consumer is quite happy; however, the financial situation for households as appraised over the next 12 months has a reading of -3 in March, with a queue percentile standing at a 23.9 percentile mark in the lower quartile of its ranked responses since 1991. It's clearly a very difficult situation to be extremely happy with the current situation but to be concerned about your financial situation over the next 12 months.

Households rate the next 12 months as relatively inhospitable to make major household purchases as well. The reading at -17 in March is just a tick higher than -18 in February and has a rank standing in its 39.5 percentile. Despite the upbeat ranking of the current situation, households do not rank the current situation as a good time to buy as the favorability to purchase goods at present has a ranking in its 13.8 percentile. Clearly, the Belgian consumer is facing cross-currents and a deteriorating trend.

Among those cross-currents, however, is not a great concern about unemployment. The unemployment reading did rise month-to-month to -3 in March from -11 in February and from -20 in January. Concerns about unemployment have been rising; however, they still have a very low 5.5 percentile standing.

One of the concerns percolating in the background is about inflation. Price trends over the last 12 months had eased to some extent, to 66.2 percentile standing. However, over the next 12 months the reading has picked up to 53 from 31 previously, to a 99.5 percentile standing; concerns about inflation have turned around and now are extremely high.

Consumers rate the economic situation at a -45 in March compared to -25 in February looking ahead to the next 12 months. The queue standing for this reading is in its 0.7 percentile, one of the lowest ratings that we have seen since 1991. The assessment for the previous 12 months has a raw diffusion net score of -42, with the standing in its 23rd percentile. Conditions have deteriorated extremely rapidly in terms of the outlook for the economic situation.
by:Robert Brusca
|in:Economy in Brief
Japan| Mar 20 2026
Japan’s Manufacturing IP Accelerates
Manufacturing output in Japan rose by 4.3% in January after rising by 0.7% in December. Total industrial production rose by 2.8% in January after a flat performance in December. By major sector, consumer goods output, intermediate goods output, and investment goods output all increased in January; each had a strong pace in January after two of three sectors experienced output declines in December and November. However, the output recovery in January is strong and solid, putting the trend for industrial output and manufacturing back on solid footing.

Sequential growth rates in Japan show overall manufacturing is growing over 12 months, six months and three months, without any particular increase or decrease in the underlying trend. The 12-month growth rate is 2.5%, the six month pace is at a 3.6% annual rate, and the three month pace has eased back to 2%.

Sequential growth rates for manufacturing are much more upbeat, with manufacturing up by 2.5% over 12 months, running at an 8.3% annualized pace over six months, and accelerating further to 12.3% at an annual rate over three months.

The main manufacturing sectors also are very upbeat, with consumer goods output rising 1.2% over 12 months, accelerating to a 3.8% pace over six months, and accelerating further to a 6.5% annual rate over three months. Intermediate goods output shows a tendency for acceleration that later calms down over three months. The 12-month pace is 3.1%, the six-month pace rises to 5.7%, and over three months the pace is back down to 4%, which is cooling from the six-month pace, but still an increase from the 12-month rate.

For investment goods, the 12-month growth rate is 3%; it rises to a 9.8% annual rate over six months and accelerates further to a 17.3% annual rate over three months. Investment goods profile is reassuring and even eye-popping, showing significant strength at a time that yen weakness is helping to make production in Japan much more profitable.

Japan is experiencing this improved performance after a long period of underperformance going back to the pre-COVID period. Industry output is 88.2% of its January 2020 level; manufacturing output is 89.4% of what it was in January 2020. By sector, consumer goods output is 87.7% of its January 2020 level, intermediate goods output is 86.5%, and investment goods production is 88.7% of what it was in January 2020.

The quarter-to-date, which is a very nascent figure since this reflects only January data, shows total industry output rising at a 12.7% annual rate, with manufacturing growing at a 27.1% annual rate, supported by double-digit increases in the growth rates of consumer goods, intermediate goods, and investment goods output.
by:Robert Brusca
|in:Economy in Brief
Germany| Mar 17 2026
Germany’s ZEW Survey Sours
The ZEW survey, which is a survey of German financial experts, showed a weakening in March as the economic situation deteriorated sharply in the wake of the start of the war in Iran. For the euro area, the reading dropped to -29.9 in March from -13.6 in February; for Germany, the reading surprisingly improved a slight bit to -62.9 from -65.9; for the United States, a positive reading of 4.5 was still posted; however, it was down significantly from +19.6 in February. China’s reading fell to -33.7 from -31.5. The rank standings for these readings on data back to late-1992 for most reporters, but only back to April 2021 for China, shows the euro area at a reading near its median over this span. While Germany and the U.S. are substantially below their medians, with percentile standings near 30% for Germany and near the 40th percentile for the U.S. China logs a stronger queue standing above its median at 68.3%.

Macro expectations fell more clearly and sharply for all the reporters in March. For Germany, the drop was to -0.5 in March from +58.3 in February, while the U.S. drop was to -28.7 from -5.1 in February. China’s drop was to -15.8 from +13.1 in February. The standings for these March readings place China at a 1.7 percentile standing, the U.S. at a 16.1 percentile standing, and Germany at a 25.1 percentile standing. All of them are quite weak in the lower quartile of their respective queues of data.

With oil prices jumping sharply, inflation expectations have simply skyrocketed on the month. For the euro area, the reading that was near 0 in February jumped to 79 in March. For Germany, a reading of -2.3 in February surged to 79.2 in March. For the U.S., an inflation expectation of 43.1 in February nearly doubled to 80.4 in March. For China, a February reading of 10.5 ran up to 56.0 for March. The queue percentile standings for the March readings rose to the 98th percentile for the euro area, Germany, and the U.S., while China's standing also moved up strongly to its 93rd percentile, when ranked over a shorter period extending back to April 2021.

With inflation going up, short-term interest rate expectations rose as well. Those expectations rose in the euro area, the U.S., and China. For each of these reporters, there was a significant increase in the short-term rate expectations. The euro area expectation survey value has a standing in its 70.9 percentile, China’s standing is at its 55th percentile, while the U.S. standing is still below its median at its 22.4 percentile.

Long-term rate expectations moved up in all areas as well, with Germany's new reading having a 66.8 percentile standing, China at a 75th percentile standing, and the U.S. at a 59th percentile standing. Each one of these is above its historic median. Long-term expectations are elevated.

Stock markets in all areas weakened in March compared to February, with most showing declines of about 50% or so in this survey. The queue standings for the new readings are all in the lower 25th percentile of their respective data queues. Some of them are significantly lower, such as Germany, which stands only in its 9th percentile. On balance, the attack in Iran has been a game-changer for economic perceptions and expectations. Markets are wary. And everyone knows the centerpiece is the Strait of Hormuz. But that does not make it much easier to handicap the future.
by:Robert Brusca
|in:Economy in Brief
Canada| Mar 16 2026
Canada’s Industrial Orders Falter
Canadian orders fell by 3.3% in January after running flat in December and falling by 1.1% in November.

The top-line sequential growth in orders shows contraction over 12 months, six months, and three months, with the pace of contraction having gotten more severe over the most recent three months.

In January, orders declined, while unfilled orders rose but decelerated from their December growth rate. Manufacturing shipments fell, durables shipments fell, durable shipments excluding motor vehicles fell, and motor vehicle shipments fell. In addition, nondurables orders declined in January although at a lesser pace than in December. Among this key batch of industrial statistics, only manufacturing inventories rose in January, increasing by 0.9%.

Progressive growth rates from 12 months to six months to three months show progressively weaker growth in shipments of durable goods, durables excluding motor vehicles, and motor vehicle shipments themselves. Inventories are also shrinking, and at a progressively faster pace over shorter periods. The headline series for orders shows a 16.5% annual rate contraction over three months, compared with a contraction pace of 7.4% over 12 months. There is no sign of stabilization in orders, and this shows up plainly in the data or on the chart.

The column heading marked “standing” shows that the standings of all the items listed in the stub are below 50%, placing each entry below its median based on data back to 1999. Judging from 12 month growth rates, the only exception is unfilled orders, which are right at the 50.4 percentile mark. For the most part, the shortfalls from their respective medians are quite severe, with the low standings for manufacturing shipments and durable goods shipments at 7.4%, out done only by a 1.8 percentile standing for motor vehicle shipments growth. The table also ranks the categories on six month growth rates, providing a slightly shorter term view to see how much conditions improve. On that basis, and viewed in that way, most of the rankings do improve. In fact, all rankings improve compared to the year over year growth rate rankings except for three: unfilled orders, durable goods shipments, and durable goods shipments excluding motor vehicles.

The six-year growth from January 2020 to date shows declines in real terms (inflation-adjusted net changes) for unfilled orders, durable goods shipments, durables shipments excluding motor vehicles, and inventories of manufactured goods. Increasing on balance over six years are orders and total manufacturing shipments, but by very thin margins. Motor vehicle shipments are up by 0.7% in real terms over six years, while nondurables shipments are up by 2.1% on balance over the same period. It has been a very difficult period for industry to cope with the strains from COVID, the war in the Ukraine, and more recently, the imposition of tariffs by the United States.
by:Robert Brusca
|in:Economy in Brief
Europe| Mar 13 2026
EMU IP Trends Are Decidedly Negative
Broad and severe weakness in European production: industrial production data for the monetary union turned decidedly sour in January. All major production categories showed declines in January, including the headline series for production excluding construction and manufacturing output. There were also drops across the major manufacturing sectors—consumer goods, intermediate goods, and capital goods—as well as in both of the consumer sub categories of durable goods and nondurable goods. January was a really tough month for the industrial sector and the European monetary union.

Sequential output weakness as well: Output is not only falling in every category in January—and for two months in a row—but the sequential growth rates over 12 months, six months, and three months also show decelerations present for all of these categories of output except capital goods. That means the six-month growth rate is weaker than the 12-month growth rate, and the three-month growth rate is weaker than the six-month growth rate for six of seven of these categories—the exception is capital goods. And capital goods are a minor exception with the growth over three months only slightly stronger than over six months, and at that it's still a negative growth rate. It shows a decline in output, just a slower decline. There is no silver lining here, just clouds and rain.

Quarter to date and more: As if that's not enough, these are output data for January so we can calculate quarter-to-date growth rates in the first quarter. On that basis, all seven of these categories show output declining, and output is declining in all seven of these categories at a double-digit pace! In addition, when we step back to compare growth rates over the last year with previous 12-month growth rates back to April 2006, a 20-year horizon, we find that all the growth rates in the table lie below their median rates of growth for this previous twenty-year span. Capital goods fare the best, with a percentile standing of its growth rate at its nearly 48th percentile, just slightly below its median, which lies at a ranking of 50%. The growth rates for consumer nondurables, for example, have had output growth weaker during this period, only 1.7% of the time. Consumer goods output has been weaker, only 3.8% of the time. Manufacturing output is in the bottom quartile among historically ranked growth rates. These are extremely bad and consistently poor rankings for industrial growth.

The table also offers up country-by-county data for January. Looking just at monetary union members, seven of twelve show output declines in January, but that compares to December, which was a strong month with only three of those members showing output declines. However, a month earlier, in November, eight monetary union members had shown output declines. There are sequential output declines reported by Germany, Spain, and Ireland over the last twelve-to-six-to-three months. Only Malta and Greece show output trends that are accelerating, and of course, these are two of the smaller monetary union countries. Seven monetary union countries show quarter-to-date output is declining early in this first quarter. Among the five countries showing output increasing, two of them showed double-digit growth rates in the new quarter and those two again are Malta and Greece. For the countries overall, only five of twelve have queue percentile standings of their earlier growth rates that are above their historic medians for the last 20 years. That list of five includes France, Malta, Greece, Portugal, and Austria.

The industrial data for Europe in January are decidedly downbeat and concerning. These numbers are being reported before hostilities in the Middle East began to ramp up and clearly before oil prices spurted higher. The European manufacturing sector is not digging itself out of the hole it fell into after COVID and the invasion of Ukraine. And after showing a hint of recovery, it now appears to be deep in the morass of economic weakness.
by:Robert Brusca
|in:Economy in Brief
Japan| Mar 12 2026
MOF Japan Business Outlook Survey
Japan's Ministry of Finance business outlook survey shows a slow but positive improvement in the outlook for employment among large firms, while the outlook for large manufacturing firms’ hiring continues to cycle and oscillate around zero (see Chart).

The assessment on current observations of the economy slipped to +4.4 for all large enterprises in the first quarter of 2026, compared to +4.9 in the fourth quarter of last year. For large manufacturing enterprises, the assessment slipped to 3.8 from 4.7. There were also slippages reported for medium-sized enterprises as well as for small enterprises; for both the total and manufacturing sectors, assessments were worse, the smaller the reporting unit (on both a net reading basis and a percentile standing basis).

The quarter-ahead assessment slipped to 3.7 from the 4.4 assessment of the first quarter for all large enterprises. For large manufacturing enterprises, the outlook slipped from plus 3.8 in the first quarter of this year to -1.1. The second quarter ahead outlook, however, improved to 4.7 from 3.7 for all large enterprises, and the manufacturing outlook for two quarters ahead picked up to 3.3 from -1.1 in the quarter ahead. However, that 3.3 outlook for large manufacturing enterprises is still below the first quarter assessment (of 3.8) as well as below the fourth quarter and the third quarter assessments of 2025.

The percentile standing of the quarter-ahead assessment for all large enterprises is 44.6. For manufacturing firms, the percentile standing is 38.4, and for nonmanufacturers it is 62.2. The percentile standing values compare the current observation with a history of observation readings back to 2007; values above the 50th percentile are above their historic medians. We can see for the quarter ahead for large enterprises all of their responses are above their medians, and the relative strength resides among nonmanufacturing enterprises; they report the highest standings.

For the second quarter ahead, the percentile standings slip for the total group of large enterprises as well as for manufacturing and nonmanufacturing, separately. This occurs even though the net assessments improve from the quarter ahead to two quarters ahead. You can get an inkling ‘why’ by looking at the ‘average’ and noting that the average two-quarter ahead reading has been higher than the average quarter-ahead reading. So, to rank higher than the quarter-ahead, the second-quarter ahead has a higher hurdle to go over. The standing for nonmanufacturing slips from a 62.2 percentile for the quarter ahead to a 58.1 percentile standing for the second quarter ahead. Large manufacturers take a relatively large step back to a 28.4 percentile standing two quarters ahead from the 38.4 percentile for one quarter ahead. These step backs are reflected in the headline which steps back to 37.8 for two quarters ahead from a 44.6 percentile standing for the first quarter ahead.

What is evident in this survey is that large enterprises that the MOF surveys are becoming increasingly pessimistic as we look farther into the future, since the current rankings for all large enterprises, large enterprise manufacturers, and large nonmanufacturers show the strongest percentile standings among this triad of readings for the current quarter, with the quarter-ahead standings weaker and two-quarter-ahead standings weaker still. This growing pessimism is not a good feature.

Medium and small enterprises not as dismally inclined Medium-sized firms: The transit to greater pessimism that we see for large enterprises as we look further into the future does not carry over to medium enterprises. Medium enterprises do see lower readings for the quarter ahead compared to the current-quarter assessments, and generally the quarter ahead provides assessments that are below the 50% mark, making them below median expectations as well. However, for two quarters ahead, the percentile standings improve, and at least for medium-sized manufacturing enterprises, there is a reading above the 50-percentile mark for that category two-quarters ahead, putting it even above the 45.2 percentile reading posted for the current quarter.

Small firms: For small enterprises, there is no real generalization across the various types of firms. Manufacturing firms’ percentile standing from the current quarter to the quarter ahead just about halve themselves, a sharp step back for manufacturers. However, for nonmanufacturers, there's an improvement from a 56.2 percentile standing in the current quarter to a 60.3 percentile standing in the quarter ahead. These two groups are moving in opposite directions for two quarters ahead. Manufacturers stop that deterioration and gain back just a small measure of what they lose in the quarter ahead with their two-quarter ahead standing, while nonmanufacturers lose some of their ebullience as the percentile standing drops to a 50.7 percentile reading from 60.3 but still sports an above-median value.
by:Robert Brusca
|in:Economy in Brief
Japan| Mar 11 2026
Japan Indicators: Strong Economy—Still, Large Question Marks
Japan's economy may not be firing on all cylinders, but the economy is looking pretty firm, and consumer confidence is just pushing up through an area that has defined several of its post-COVID peaks. Inflation in Japan is uncomfortable. The PPI index rose 0.2% in January and is running at 2.4% year-over-year. The headline CPI for January declined by 0.1% and is running at a 2.4% annual rate, above the Bank of Japan’s preferred target. However, it only has a 61.7 percentile standing compared to a 71.7 percentile standing for the PPI—above its median but not terribly high on data back to 2006.

Retail sales: Key Japan activity variables are showing sustained expansion. Retail sales in January rose by a sharp 4.6%. The sequential growth rate for retail sales mushrooms from a 1.9% pace over 12 months to a 7.3% pace over six months to 15.8% pace over three months. That’s very solid and extremely strong.

Exports: But with the yen weak on global exchange markets, Japan's exports rose by 9.9% in January. The sequential growth rate for exports is 16% over 12 months, which jumps to a 38.7% pace over six months and then jumps again to a 67.8% annual rate over three months. These are stunningly strong figures.

Jobs: Employment in Japan continues to show month-to-month gains, but the gains are not historically strong, even though the sequential performance is sound at 0.5% growth over 12 months and picking up to 0.6% at an annual rate over three months. That’s not bad for a country with fading demographics. However, the standing for employment is only at its 45th percentile, putting it below its median, which occurs at a ranking of 50%. On the other hand, the ranking is not far below its median, with its 45.3 percentile standing.

LEI: Japan's leading economic index rose by 1.9% in January, accelerating from its December increase of 0.6%. Again, the sequential growth rates for the LEI are strong and hint at acceleration, with a 2.5% gain over 12 months, a 9.9% annual rate gain over six months, a pace that is nearly maintained over three months, where the growth rate comes in at a nearly identical 9.2%.

Surveys: The LEI, viewed as a level, is showing ongoing gains and has a historic standing that is near its historic median. The economy watchers index has weakened in the past few months, but the sequential averages show ongoing upward momentum and a historic ranking above its median at a standing in its 52nd percentile.

Inflation: The inflation numbers are the ‘fly in the ointment’ for Japan, although neither the PPI nor the CPI headline (headline excluding fresh food) shows a tendency - a strong tendency - to accelerate. However, there's a war in the Middle East. Oil prices are going up, and that’s going to hit Japan hard — and it’s going to have an inflation effect.

What will central bankers do? One of the key questions moving forward is how central banks are going to deal with the inflation effects from oil, because while it clearly gives a supply shock, it's a relatively large one and nobody is sure how long-lived it's going to be and how much of this supply shock will get into the core inflation measures beyond just the headline.
by:Robert Brusca
|in:Economy in Brief
Germany| Mar 10 2026
German Exports and Imports Slide in January; Sharp Import Drop Boosts Surplus
German trade flows weakened in January, with imports dropping 5.9% month to month and exports falling 2.3%. With both flows falling sharply and imports dropping at more than twice the rate of exports, the trade surplus in the month ballooned to €21.2 billion from €17.4 billion in December.

The progression of nominal growth rates for exports shows the slowing from 0.6% over 12 months to 0.3% over six months to -3.1% at an annual rate over three months. The import decline is weaker and is gathering even more downward momentum, with imports falling 4% over 12 months, dropping at a 7.4% annual rate over six months, and reaching a 15% annualized decline over three months.

Measured in real terms, exports fell by 2.9% in January as imports fell by 6.8%. The sequential growth rates for German exports and imports both show progressive deterioration, with imports weakening faster than exports. This trend is worrisome because it says that the nominal weakness is not just because of what prices are doing. Weak imports usually indicate weak domestic demand; for Germany, that could be a really bad signal. In addition, because Germany exports so much to other EMU nations, German export weakness raises questions about demand strength among fellow EMU members - and about global demand in general.

Lagged trends Lagged results give us a look into export and import trends with a one-month lag. As of December, both exports and imports still rose month-to-month. Sequential export growth was steadily accelerating, while sequential import growth rates were already decaying. German consumer goods exports were accelerating sequentially, and the ‘other exports’ category is not on its own acceleration path, but the category remains strong.

For imports, the overall nominal flows were decelerating from 12-months to 6-months to 3-months. Capital goods and motor vehicle imports both showed sequential weakening. Consumer goods imports were oscillating but still generally strong. Other imports were on a recent accelerating path, switching from negative 12-months growth to a 1% gain over six months and a 4% pace of increase over three months.

Summing up On balance, German trade trends show a lot of weakness. Much of it seems to have welled up in January ahead of the new Middle East conflict. Right now, German economic data and diagnostic trade data are not sending out good signals about the German economy.
by:Robert Brusca
|in:Economy in Brief