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| Aug 05 2024
Global Composite PMIs Tail in July
Composite PMI data for July show a slight worsening compared to June across most of the 24 countries and areas reporting composite PMI data. Among the 24 countries and areas that supply early data on this measure, only 8 show improvement month-to-month in July that's after seven showed improvements in June.

The unweighted average for the sample shows a slight cooling to 51.6 in July from 51.9 in June continuing the slowdown from 52.9 in May. However, median statistics provide a slightly different picture, with the median reading in July strengthening the 51.2 from 50.8 in June compared to a median value of 52.3 in May. On both average and median metrics, there is a weakening from May to July that averages a downgrade of about one diffusion point.

Sequential data showing performance over 12 months, six months, and three months indicate little change across reporters for the average metric. The 12-month average is at 51.5, the six-month average moves up to 52.2 and the three-month average moves down to 52.1. Median data over 12 months show a reading at 51.3 moving up to 51.8 over six months and then moving back down to 51.3 over three months. Conditions are relatively static at readings just slightly above the breakeven diffusion value of 50.

In July, there are 7 reporters with PMI values below 50, indicating overall economic contraction. That compares to 8 in June and 4 in May. Sequential data show 8 jurisdictions below 50 over 12 months, 6 below 50 over six months and 5 below 50 over three months.

Tendencies to decelerate have fluctuated, with 40% showing deceleration month-to-month in May compared to 72% in June and 56% in July. Looking at the averages from 12-months to six-months to three-months, 52.2% of reporters show slowing over 12 months compared to 12-months ago, 30.4% show slowing over six months compared to 12-months, and 56.5% show slowing over three months compared to six-months. There is no trend here and there's little evidence of any significant strength. But there is growth.

The queue percentile standing data stand on average at 41.2% with a median at 38.1%; these are roughly similar figures showing that the average or median representative country is below its mean/median by about 10 percentile-standing points. Eighteen of these 24 jurisdictions have percentile standings below their 50th percentile, while only 6 have standings above their fiftieth percentiles. However, in terms of diffusion standings, only seven jurisdictions have readings that are below the diffusion value a 50 which indicates not just underperformance but economic contraction.
by:Robert Brusca
|in:Economy in Brief
Global| Aug 02 2024
Money Supplies Bounce Back; Money Growth Is Up Ahead of Central Banks Taking Strong Rate-Cut Action
The money supply picture in June is beginning to turn with growth on the rise. In the European Monetary Union, M2 growth progresses from a 1.3% pace over 12 months to 2.1% over six months and accelerates to a 4.3% annual rate over three months. The rate of growth in private credit in the Monetary Union is 0.8% over 12 months, moves up to 0.9% over six months, and to 1.6% over three months.

Real money growth: EMU- Indexing these variables for inflation to look at rates of growth in real money balances in the European Monetary Union, shows a decline of one-half of one percent over 12 months, a decline at a 0.3% annual rate over six months and an increase at a 0.7% annual rate over three months. Monetary growth has completed the progression from being in a contractionary mode to being expansionary in real terms. Real private credit has not yet made that turn. The growth in credit over 12 months is -1.7%. That contraction is reduced to a pace of -1.5% over six months, but then, over three months private credit growth contracts 2% at an annual rate. On balance, real private credit growth continues to be restrictive.

Other monetary centers- Turning to the other major monetary center countries, we see positive nominal money growth in U.S. M2 and U.K. M4 over three months, six months, and 12 months. Japan moves in the opposite direction with growth rates of money slowing down and showing contraction over three months. Japan has been on the opposite cycle for some time. Japan just this week executed a rate hike as all the rest of the money center central banks have begun or are anticipating interest rate cutting. The ECB began cutting rates a while ago. The Bank of England cut its key policy rate just this week while the Federal Reserve had a meeting this week and decided not to cut rates although it began to point to September. In the wake of some surprising data, especially the U.S. employment report for July, U.S. markets have gone a little nutty, and they're starting to price in not just a rate cut but a large rate cut and several of them. The U.S. case marks a strong change in market pricing. I would caution what markets are doing on the heels of this employment report since the employment report clearly showed that there were flaws. A large increase in the number of workers who were not able to work because of weather conditions and yet markets have completely ignored this and treated all of the weakness in that report as though it's authentic weakness. It's not clear that that's the case, but for now markets are on that bandwagon- keep an eye on U.S. data.

The growth rate in U.S. real money balances shows that, without the Federal Reserve changing policy, money growth has become stimulative. Over 12 months the U.S. monetary aggregate M2 declines by 1.9%, over six months it declines at a 0.2% annual rate, and over three months it increases at a 2.6% annual rate. U.K. 12-month money growth in M4 declines by 1.9%, then it increases at a 0.8% pace over six months and at a 0.7% pace over three months. In Japan, with a tightening kicked off, the 12-month growth rate for M2 plus CDs is -1.3%. That stays pretty level at -1.4% at an annual rate over six months, but over three months that tightens considerably to a decline rate of -4.9% at an annual rate. Japan is barely touching the brakes on interest rates while money supply is showing some significant weakness. Since late-2022, Japan's M2 growth has been consistently showing declines; about a year ago, Japan began to show some slight increases. However, declines are back and now they're starting to progress to even weaker numbers. Japan’s situation is still in flux as its headline inflation rate has been moving up, but its core inflation rate has remained relatively stable and to right around its target rate.
by:Robert Brusca
|in:Economy in Brief
Global| Aug 01 2024
S&P Global MFG PMIs Weaken…So What?
Asian MFG mostly turns lower in July- but it’s not trending there The final S&P manufacturing PMIs show weakening median and average readings in July. The table above shows that of the 18 reporters, only 16.7% improved month-to-month. The table sorts these observations into cohorts of PMI values. Having only 38.9% in the sweet spot of 50-55 diffusion reading cohort is telling. The 40-50 cohort growth, the first tier of output declines, houses over half of the reporters (55.6%) in July. That proportion is slightly larger for the 12-month average and has been even worse (larger) for the 12-months before that.

In July, there are 10 reporters below the 50% breakeven mark. That total has been at 9 to 10 over three months, six months, and 12 months.

The number (percentage) of reporters in the first upper tier of growth 55-60 has been consistent at 5.6% (one reporter).

The pattern of the manufacturing PMI readings suggests there is a lull in manufacturing. But manufacturing has been stagnant and weak-to-contracting throughout 2023. In 2024, conditions began to improve. We are now seeing a back off in July compared to June. However, the median reading in June had improved relative to May, although the July reading is below the May median and it was last weaker in December 2023. In contrast, the average for the group is back to its April value. There is some easing of conditions, but it’s a mixed bag.

Data-watching market-watchers are looking for consistencies and trends to jump on. Unfortunately, there is little evidence here of any new trend. July is weaker than June but 2024 has been stronger than 2023; it is far too soon to look at a one-month drop as evidence of new weakness.
by:Robert Brusca
|in:Economy in Brief
Europe| Jul 31 2024
EMU HICP: Stuck in the Middle with You?
Inflation in the European Monetary Union picked up in July, rising by 0.4% compared with a 0.1% rise in June. Progressive inflation rates calculated over 12 months, six months and three months don't show a clear pattern, but the tendency is uncomfortable. The 12-month pace of 2.5% is exceeded by both over three months and six months. Over six months the pace jumps to 2.8%; over three months it backs down but by just a tick to 2.7%. To the extent that represents a pattern is not a good one.

The four largest economies in the Monetary Union each shows acceleration for July compared to June. Italian inflation jumped by 0.9% month-to-month in July after rising 0.2% in June. German inflation rose by 0.5% after rising 0.3% in June. In France, prices rose by 0.4% after rising 0.1% in June. Spain logged an increase of 0.2% after having prices fall 0.1% in June. These monthly numbers show a clear tendency toward acceleration.

Headline trends- Over three months the large country trends are mixed. Germany and Italy show accelerations in their respective HICPs over three months compared to six months. And both also show acceleration over six months compared to 12 months. But France and Spain each show weaker inflation over three months than over six months; Spain shows inflation steadily cooling from 12-months to 6-months to 3-months. Only Spain shows 3-month inflation below 12-month inflation. The 12-month pace of inflation is higher in July than in June for three of four large countries, again with Spain as the exception. Despite this inflation slowdown, Spain has also been a leading growth economy in the second quarter. However, below we will see that Spain’s core inflation trend tells a different story.

Core trends- Core (or ex-energy inflation) shows acceleration in Germany, Italy, and Spain. Despite Spain’s encouraging headline inflation and inflation progression, the core tells a different story. Spanish and Italian core inflation rates show steady acceleration from 12-months to 6-months to 3-months. Germany’s three-month pace exceeds its six-month pace and its 12-month pace; there is a slight one-tick reduction in the pace from 12-months to 6-months. On balance, core inflation is not encouraging. Core inflation rates are well above 2% over 12 months, ranging from 2.5% to 2.8%. The 3-month paces range from 3.1% to 4.3%.

Central bankers- Central bankers have been poised to announce rate cuts and the ECB has already started the process. But inflation developments do not seem to be encouraging for that process to continue. Meanwhile, the Federal Reserve in the U.S. continues to talk of inflation behaving and looking more manageable. In the U.S., there is some motivation for a policy shift from a steady rise in the rate of unemployment. Of course, cutting against this grain, is the BOJ that has been on a different path and just today announced a long-awaited rate hike.

Trend dilemma- The chart is clear that inflation in the U.S. and in EMU has dropped then has flattened out to a pace above target in both the U.S. and the EMU. The U.K. faces similar resistant trends. Central banks are eager to try to put growth back in gear. Recent EMU growth has been lackluster; growth in the U.S. has been much better, but the U.S. employment-creating machine shows signs of aging. Policy makers have a motivation to cut rates, but they also have a lengthening legacy of being over target. Something has shifted in their central bank reaction functions and priority schemes to create this difference. Inflation is no longer the only objective in town, and it may no longer be the main one. Alternatively, central bankers may have simply effectively loosened their targets by reducing their vigilance and adherence rather than shifting the actual target. They do this by excusing short-term overshoots but claiming 2% is still the long-term target. There has been a lot of criticism of central bankers targeting 2%. And while central banks continue to voice their devotion to 2%, their actions suggest something else.
by:Robert Brusca
|in:Economy in Brief
Europe| Jul 30 2024
EMU Flash GDP Runs a Tick Slower in Q2
EMU growth is a tick slower in Q2 2024 with a flash growth rate of 1.0%, down from 1.1% in Q1. Essentially, it’s an unchanged performance in the quarter at a slow one-percent annual rate.

The Q2 annualized quarterly pacer fails to slow in only two of the seven early GDP reporters in the table as Irish GDP ramps up to a 5.1% annual rate in Q2 from 2.8% in Q1 and French GDP steadies at 1.1%.

However, splitting EMU GDP into the four largest EMU economies (Germany, France, Italy, and Spain) vs. the rest, shows that the slowing is concentrated on the largest EMU economies. For them, growth slows on a weighted basis to a 0.8% pace in Q2 from 1.3% in Q1. The rest of the EMU is estimated to have flash growth at 2.0% in Q2 compared to 0.4% in Q1.

Over four quarters, the Q2 growth rates show EMU speeding up slightly to 0.6% in Q2 from 0.5% in Q1. The four largest EMU economies log growth of 0.8% in Q2, the same as in Q1, while growth in the rest of the EMU falls by 0.3% annualized compared to dropping at a 0.8% pace in Q1.

By country, the quarterly four-quarter growth rates slow in Belgium, France, and Portugal.

The annual four-quarter growth rates in Q2 show only Italy and Spain at a pace above their historic medians; however, Portugal is close with a 47.8 percentile standing. EMU growth has been stronger nearly three-quarters of the time. The four largest economies have been stronger nearly one-third of the time while the rest of the EMU has been stronger more often, about four-fifths of the time.

These ranking benchmarks help to establish a general relatively as a reference for the countries and the country groups as well as for the EMU. The median four-quarter growth among reporters at a 38-percentile standing is relatively stronger than the (weighted) EMU total. This is slightly surprising since four largest EMU economies log growth that ranks higher than for the rest of the EMU.

U.S. growth performance leaves the EMU and all its early reporters in the dust with the partial exception of Spain whose four-quarter growth rate of 2.9% is close to the U.S. at 3.1%. But the relative strength of U.S. growth is at its 73.9 percentile compared to Spain that has a stronger structural growth rate and logs growth only at a 56.5 percentile.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Jul 29 2024
U.K. Posts Weak Readings in Retailing
Bad weather is being cited for poor U.K. retail performance in July as sales compared to a year-ago in retailing fell to a net diffusion reading of -43 from -24 in June. However, expected sales are being marked down calling to question the notion that weakness is all weather-related.

Retailing Reported Sales- Orders compared to a year-ago dropped to a net reading of -40 in July from -14 in June. However, sales for time-of-year improved slightly to -36 in July from -39 in June. Stocks relative to sales moved sharply higher into a net +32 in July from a level of +3 in June. Stocks relative to sales showed a huge increase from June to July. The diffusion reading of +32 gives it a 97.5 percentile standing, a standing that has been its higher historically only about 2.5% of the time, marking it as quite unusual.

Sales Issues- An increase in stocks relative to sales like this would usually occur for unintended reasons and so this increase bolsters the argument that sales were unexpectedly weak in July. However, against this background, it’s also clear that sales compared to a year-ago, and orders compared to a year-ago, both have been weakening persistently from May, to June, to July; more than what can be explained by one-month’s bad weather. Sales for the time-of-year were also sharply weaker in June and July than they were in May despite the small improvement in July. The rank standings for both the sales measures and the orders show percentile standings in the bottom 10 percentile or lower by rank for all three of those metrics.

Expected Sales- However, with the July survey, we also get expectations for August. I would expect that if weather had been a primary factor causing conditions in July to be poor, we would expect some bounce back in August and that's not what we see in the survey. Instead for August, we see a sharp deterioration for expected sales compared to a year-ago and expected orders compared to a year-ago; both weaken in August compared to what had been posted for July. Once again sales for the time-of-year improved, this time in August to -21 from -29 in July. The expected stock-sales ratio is up sharply to 21 in August from zero in July and again to a 91.2 percentile standing. Meanwhile, the percentile standings for both the sales and the orders measures are weak in the bottom 15 percentile or lower.

Wholesaling Reported Sales- In wholesaling, we see a repeat of some of the dynamics that appear in retailing for July. Sales compared to a year-ago weakened sharply to -21 in July from -12 in June. Orders compared to a year-ago weakened to -11 in July from -6 in June. Sales for the time-of-year also weakened, and weakened more sharply, for wholesaling to -28 in July from +4 in June. The stock-sales balance for the time-of-year moved up modestly to +9 in July from +5 in June. The queue standings are still weak across the board, in wholesaling but quite different from what we observe for retail sales. Wholesale sales compared to a year-ago and sales for the time-of-year are both weak. But the year-ago measure has a 12.7 percentile standing and the time-of-year or seasonally-adjusted comparison is at a weaker 4.9 percentile standing. Orders compared to a year-ago have a 28.5 percentile standing, still weak, but not in the same dregs as those plumbed by sales measures. The stock-sales balance has a 36.3 percentile standing, elevated compared to the other measures, but again no comparison with the very high ranked standings that we see for inventories in retailing.

Expected Sales- Expected sales for August also show sharp deteriorations with sales compared with a year-ago falling to -19 in August from -4 in July. Orders compared to a year-ago fall to -11 in August from +2 in July. Sales adjusted for the time-of-year fall to -21 in August from -3 in July. The stock-sales ratio balance shows a rise to +9 in August from +4 in July. The ranked percentile standings once again produce the highest standings for the stock-sales ratio with a 39.6 percentile standing that is still below its median which resides at a standing at the 50-percentile mark. The two sales figures are quite weak with sales compared to a year-ago with the 13.3 percentile standing and sales for the time-of-year with a 9.8 percentile standing. Orders compared to a year-ago have a 27-percentile standing, still quite low and just above the lower quartile of its historic ranking of values.
by:Robert Brusca
|in:Economy in Brief
France| Jul 26 2024
France: The Olympics Come and Growth Goes?
The INSEE manufacturing survey and services survey for France both took a considerable step lower in July in the wake of some turbulent French elections and on the doorstep of France hosting the Summer Olympics. As I write this, there are reports of acts of sabotage on French railway lines intended to disrupt the Olympics. None of those actions is reflected in the data presented here today. But they may emerge in subsequent reports. The monthly drops reported here are the seventh largest for services back to 2000 and for manufacturing the ninth largest month-to-month drop.

Industry climate in France fell to 95.5 in July from 98.9 in June. Climate has a ranking at its 16.7 percentile which means it has been lower less than 17% of the time.

Manufacturing Manufacturing production expectations fell sharply to a reading of -18 in July from a reading of -11.6 in June. The standing for the reading is in its 19.8 percentile, implying that expectations have been lower less than 20% of the time.

The recent trend of production also slipped to -5.4 in July from -2 in June; survey respondents reported that their own industries personal likely trend slipped to -4.9 in July from +1.8 in June. The overall recent trend assessment for industry has a 15-percentile standing, while the personal likely trend standing has a 7.3 percentile standing; both are still extremely low readings.

Overall orders and demand slipped in July to -19.9 from-18.4 in June. That series has a standing at its 35.6 percentile. Foreign orders and demand slipped by more, dropping to -18.5 in July from a reading of -8.6 in June; that series has a 27.1 percentile standing.

Inventory levels rose in July to 8.8 from 8.4 in June and have a 44.5 percentile standing, closer to their historic median; the median occurs at a reading of 50%.

Prices show some lift in July with the own likely price trend rising to +7.0 from +3.7 in June and logging a 62.8 percentile standing, above its historic median. The manufacturing price level indicator rose to +6.9 in July from +2.9 in June, logging or below median 42-percentile standing.

The far-right hand column shows that most of these survey entries are lower than they were in January 2020 before COVID struck. Inventories are slight exception, and prices are an exception as well, showing more pressure now than there had been prior to COVID.
by:Robert Brusca
|in:Economy in Brief
Belgium| Jul 25 2024
Belgian Bank Index Shows Still Weak Industry
The Belgian National Bank index in July weakened to -12.3 from -11.1 in June. The -12.3 reading is the weakest since it was -12.8 in February. The index has not weakened greatly; however, instead it has languished in the -10 to -11 region. July stepped down to the -12 region, indicating ongoing morass for Belgian industry. The three-month change in the index worsened by 0.4 points; however, over six months it improved by 4.1 points, but over 12 months it improved by only 2.5 points. There is some improvement in the history, but the improvement over six months is stronger than over 12 months, a good sign except that over three months some of that gain has been given back. This leaves the trend in an uncertain situation.

The standing for the index is in its 14.3 percentile which leaves it very low in its queue of historic readings. Manufacturing alone has a 17-percentile standing, slightly better than for total industry, but still not too different from the total industry mark that is poor.

Manufacturing worsened in July to -14.9 from -13.1 in June. The production trend for manufacturing, however, has improved slightly, rising from -3 in May to -2 in June to -1 in July. The July reading is its best since a rogue improvement brought the index to zero in March. Setting that aside, this is the strongest reading since June 2023.

The domestic order trend, on the other hand, is weak and somewhat worrisome. In May the reading was -7; in June it fell sharply to -19 and in July it stayed in that region with the -20 reading. The domestic portion of demand for Belgian industry has weakened significantly in the last two months and stayed at that weaker posture.

Foreign demand during this period weakened as well. The foreign order trend in May was 0 that weekend -5 in June and improved only slightly to -4 in July.

Price trends show negative readings in May and June that turned to a positive reading of plus one in July.
by:Robert Brusca
|in:Economy in Brief
Global| Jul 24 2024
The PMI Plot Thickens...
The unweighted average among the 8 units reporting in the table improved month-to-month. The composite average from 12-months to 6-months, to 3-months, gets progressively stronger by a small amount. But the July value for aggregate data is below the recent (lagging) 3-month average that is constructed from hard data from June backward. As a result of these data entanglements, the trend for this group is quite flat and hard to pin down.

However, there are trends and events of importance in this month’s report- especially regarding the performance of the U.S. services sector that need attention.

The progressive average shows strengthening from an average over 12 months, to six months, to three months for both aggregated manufacturing and services sectors. Yet, both services and manufacturing are weaker in July than over their respective previous three-month averages.

Month-to-month changes show a split situation in July; 12 of 24 sector readings are weaker and 12 are stronger. Among these, five total-indexes (or composite indexes) are stronger month-to-month while three are weaker. But in June many more composites weakened and in May many more strengthened.

The queue percentile standings that position the monthly PMIs in a string of data back to January 2020, show only nine of 24 rankings above a standing of 50% which marks the median for each data-series on this timeline. Of those nine, three are India, while Japan and the U.S. account for another two each. The EMU and Germany each have service sector standings above the 50% mark.

The U.S. service sector reading headlines this report Interestingly, the U.S. ranks above 50% for its composite and for services. Services show a strengthening in each of the last three months. This is huge! It stands in stark contrast to astonishing weakness reported by the ISM services report in June. With the U.S. strength in services this month reported by S&P, there is no squaring those two reports as have a timing difference or some other technicality. That possibility is gone. They are simply different and quite different. In fact, the S&P service sector ranking for the U.S. in July has a 69-percentile standing- a standing in the top one-third of historic observations since January 2020. In contrast, on this same timeline the ISM services gauge is the third weakest observation over those 54 months. These are vastly different pictures of the performance of the U.S. services sector, an especially important sector for the U.S., for the Fed, and for global monetary policy. All eyes are on the Fed with inflation having notched lower again and the Fed looking for confirmation of a lower inflation trend to pull the rate-cut trigger. Inflation is most intense in the U.S. services sector. But it broke lower in June. Is the services sector weak, and will inflation continue lower? Or is the services sector strong, and will service sector inflation rise and remain stubborn? We are looking at severely conflicting data. The ISM services diffusion reading in June has a value of 48.8; that compares to a reading of 55.3 in the S&P survey and now to 56.0 in the S&P July survey.

Not only do opinions on the economy clash but so do data that pertain to the same phenomena… That is not reassuring.
by:Robert Brusca
|in:Economy in Brief
Denmark| Jul 23 2024
Danish Confidence Continues Its Lull
Danish confidence continues to post negative values in July. The July confidence reading is slightly worse than in June, but its negative reading is not as deeply negative as in May, although it comes in right on its three-month average. Sequentially the average readings for Danish confidence are improving from -23.5 on its 12-month average of a year ago, to a -8.9 average over the most recent 12 months, to a -6.7 average over the recent six months, and to average -5.4 over the last three months.

Danish trend The chart shows a relatively rapid improvement in confidence from late-2022 to mid-2023. Since then, the improving gradient has been less steep but still shows steady, if not monotonic, improvement. This month’s backtracking is not unusual as there have been five monthly backtracks over the last 12 months even as the index improved by 4.7 points on balance, an average monthly gain of about 0.4 points per month. This is normal volatility, not at all unusual.

The chart also plots the Danish figure against the Sentix gauge for the EMU. That relationship shows a tracking of Denmark with the Sentix gauge, with Sentix being the more volatile reading. Currently both Denmark and Sentix are on improving trends and each have negative readings.

Environmental standings The Danish data show readings for confidence and a separate set of readings pertaining to the environment. The environmental readings are mostly higher than the percentile standings of other conditions and their future values except for inflation. Inflation expectations in Denmark are still elevated.

Notably the environment shows standings for most environmental variables in their mid- to upper-fiftieth percentiles leaving the rankings moderately above their period medians (medians occur at a rank of 50). The exception here is a weak 17.3 percentile standing for the favorability of the time to purchase, but that improves to a 57-percentile standing on the outlook for the next 12 months.

Confidence Consumer confidence itself has a ranking at its 16th percentile with weaker readings for the 12-month outlook that for the last 12-months for the components ‘financial situation’ as well as for the ‘general economy.’ The outlook standings for these two components have values in the 7th percentile (Financial Situation) to the nearly 18th percentile (General Economy), both quite weak.

The unemployment trend for the next 12 months has been fluctuating at a value of +7. That has a 65.5 percentile standing. That puts expectations for unemployment moderately above its historic median, which is slightly uncomfortable.

Inflation expectations are lower on the outlook than the look-back over 12 months, but both have elevated standings with the backward-looking standing at 87.6% and the outlook still high at 70.9%.
by:Robert Brusca
|in:Economy in Brief
Belgium| Jul 22 2024
Belgian Consumer Index Skims Along Further Below Zero
The National Bank of Belgium Consumer Confidence Indicator fell to -5 in July from -1 in June. It stands one point above where it stood in January 2020 before COVID struck. Since the early-1990s, the index has been lower than its current value about 59% of the time, marking it as above its historic median by a modest amount, near the upper one trend of its historic queue of values.

The assessment of the economic situation for the next 12 months deteriorated slightly in July, as it fell by one point. The backward-looking assessment by comparison worsened by 3 points compared to June. The outlook has a weak 29.6 percentile standing.

Price trends show more inflation ahead is expected while looking backward participants see slightly less pressure on a month-to-month comparison. The look-ahead on inflation has a 20.2 percentile standing, marking it as low historically.

The look-ahead on unemployment is higher in July, rising to 19 from 12 in June. That index number on expectations has a 41-percentile standing, below its historic median (the median occurs at a ranking of 50). While it is up month-to-month, it is lower than the May reading of 23 but higher than the year-ago reading of 15. Unemployment expectations are somewhat volatile and close to historic norms.

The financial situation is little-changed month-to-month. The next 12-month assessment improved by 3 points month-to-month, the look backward shows conditions worsened in July compared to June but only by a tick, and the current appraisal remained dead flat at a reading of 23. Unfortunately, the look-ahead, which is most important, produces the lowest standing among these three horizons. The look ahead rank standing has been weaker about one-third of the time, the look backward at the last 12 months has been better only about 30% of the time, and the current assessment is at a strong 89.6 percentile standing. While the current situation is quite strong, the outlook is poor. There is a good deal of let-down between how things appear now, and what is expected for the financial situation ahead. That is disconcerting.

Household savings over the next 12 months worsened to a reading of 16 in July from 20 in June. This reading has an 85.3 percentile standing. The assessment on the favorability of the environment to save has a 91.4 percentile standing. That response improved by one tick in the month.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Jul 19 2024
U.K. Retail Sales Step Back in June as Confidence Continues to Climb
U.K. retail sales in June fell by 1.3% after rising by 3.3% in May and falling by 2% month-to-month in April. The performance of two key industries, the food, beverages & tobacco complex, as well as clothing & footwear follows the same pattern with June declines, May increases, and April drops. April showers may have brought May flowers but then June sales soured.

Sequentially U.K. retail sales rise by 0.6% over 12 months, accelerate to an 8.3% annual rate over six months, but then decline at a 0.7% annual rate over three months.

Real sales Retail sales volumes, which refer to retail sales adjusted for price, show the same pattern as the overall retail sales, declining by 1.2% in June, rising by 2.9% in May, and then falling by 1.5% in April. U.K. retail sales volumes fall by 0.2% over 12 months, accelerate to a 7.6% annual rate of increase over six months and then slow but continue to rise at a 0.4% annual rate over three months. The retail sales pattern is not clear on whether acceleration or even growth is going to endure because the 3-month growth rate is so low, but there has been a strong improvement over six months and retail sales volumes numbers show only a slight decline over 12 months. On balance, this retail sales pattern is consistent with the idea that U.K. retail sales are stabilizing and are ready to continue to advance. Certainly, the performance of consumer confidence suggests that that's what's waiting in the wings; however, the trends themselves are indeterminate.

Car registrations One volatile element of consumer spending is spending on passenger cars. Passenger car registrations had risen strongly for two months in a row, gaining 3.1% in June and 3.3% in May. Those two very solid and strong months, however, follow an even larger decline of 8.8% in April. As a result, passenger car registrations reveal a decelerating profile based on the sequential growth rates. Over 12 months passenger car registrations rise at a 2.4% pace, over six months they fall at a 4.7% annual rate, and over three months they fall at an 11.1% annual rate. The persistent decline in spending on this big-ticket item is a bit unsettling, but on the other hand, the 3-month growth rate gets all its weakness from April whereas June and May show a sharp rebound after that April decline. Even though we're looking at sequential deterioration, it is sequential deterioration with some optimistic results being reported in the recent two months.

CBI surveys and confidence U.K. retail surveys on the month from the Confederation of British Industry (CBI) show sales for the time of year with a -41 diffusion assessment in June compared to a +22 in May. The volume of orders year-over-year register a net diffusion reading of -3 in June compared to +38 in May. Both those series posted negative numbers in April. The ups and downs of the CBI series follow the ups and downs of both real and nominal retail sales in the most recent three months. The CBI survey of retail sales for time of year does not offer a clear pattern either. When we look at the change from 12-months to 6-months, to 3-months, there is no clear trend. However, over each horizon, ‘sales for time of year’ post a negative number. The ‘volume of orders year-over-year’ logs a negative number over 12 months but then two positive numbers over three months and six months. But there is no steady progression in place so as the trend indicator there's no clarity in the volume of orders. Over three and six months, both readings are now positive numbers. Consumer confidence has a positive reading in April, May, and June that also shows consistently positive readings over three months, six months, and 12 months.

Quarter to date The quarter-to-date metrics, which are at this point for completed Q2 in the U.K., show declines in nominal sales in food and clothing industries as well as a decline in retail sales volumes and a decline for passenger car registrations. CBI retail sales for the time of year and CBI order volumes year-over-year both post negative numbers although GfK consumer confidence shows an increase. The second quarter was not particularly good for retail sales or their indicators in the U.K.

Growth has been quite weak In addition, the far-right hand column gives us the standings of the indicators and the growth rates on data back to early 2000. On that basis, sales have been weaker than they currently are only 10.8% of the time, although real volumes are holding up better: they have been weaker 28% of the time. Passenger car registrations have a standing at 56.5% which means they are above their median and have been stronger less than 45% of the time. The CBI survey has continued to spin out weak numbers with the retail sales ‘for time of year’ lower than the current reading only 5.4% of the time historically. The CBI ‘volume of orders year-over-year’ historically has been weaker only 26.1% of the time. Consumer confidence is closer to neutral with a 45.1 percentile standing a data back to early 2000s.
by:Robert Brusca
|in:Economy in Brief