Haver Analytics
Haver Analytics


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

  • Italian industrial production for manufacturing rose 0.1% in September after gaining 0.3% in August. These increases came after a 1.2% drop in July and they're still part of a sequence of continuously declining industrial production calculations over the past 12 months for Italy.

    Italian manufacturing production fell by 2.2% over 12 months; the pace of reduction has eased slightly to -1.5% over 6 months then it steps up to a decline at a 3.4% annual rate over 3 months. We see industrial production declining on all three timelines. The 3-month deterioration is at a faster rate than at 12-months, but over 6 months, there's an interruption in that deteriorating trend that makes the overall trend ambiguous.

    Consumer goods- Consumer goods production fell by 2.2% in September after rising 1.3% in August and falling 1.6% in July. The annual rate decline in consumer goods output is 6.8% over 12 months; that's reduced to a 4.7% declining pace over 6 months but then blows out to a decline of 9.5% at an annual rate over 3 months. This pattern echoes the overall pattern from manufacturing output on the same timeline.

    Capital goods- Capital goods output rose by 1.5% in September after output declined in August and July. Capital goods output shows a clear decelerating sequential trend, however. After rising 2.6% over 12 months, it reduces that to a 1.2% pace of increase over 6 months and then output declines at a 2% annual rate over three months.

    Intermediate goods- Intermediate goods output rises by 0.8% in September after falling 0.7% in August and falling 0.4% in July. Intermediate goods are the only category that shows that declines in output are occurring at a diminishing pace as output falls 2.8% over 12 months; that's reduced to a -1.4% rate over 6 months and reduced slightly further to a -1.2% annual rate over three months.

    Overall manufacturing goods production clearly is declining although the sequential patterns are not firmly established.

    Transportation- Trends for transportation equipment show deterioration although there's a strong gain of 6.1% in September compared to August. Output rises at an 11.7% annual rate over 12 months, and at a 5.9% annual rate over 6 months, but then falls sharply at an 8.6% annual rate over 3 months.

    Industrial measures Various industrial measures are presented at the bottom of the table including the EU industrial confidence measure, the Istat current orders and Istat outlook for production. In the most recent 3 months, there are nine of these observations and of these nine observations only one is positive and another is zero; the rest are negative, showing widespread weakness across these industrial metrics.

    The industrial metrics show persistent negative readings over 3 months, 6 months, and 12 months. But that generally is not a pattern of worsening deterioration. The industrial confidence measure and the Istat current orders measures both show readings that are less weak over 3 months than over 12 months although the Istat outlook for production metric is weaker over 3 months and over 12 months.

    Rankings Turning to the final column of the table, the rank standings show all these metrics are below their historic medians (that means below a ranking of 50%) except for capital goods output. Manufacturing industrial production has a 28-percentile standing, consumer goods output has an extremely weak 6-percentile standing, intermediate goods have a 31.6 percentile standing, while capital goods have a 60.7 percentile standing, above its historic median. For transportation output, there's also a reading that's above its 50-percentile at 69.5. However, the industrial measures at the bottom of the table have very weak standings for the most part with the EU industrial confidence measure having a standing just under its 20-percentile. The Istat outlook for production reading is at its 14.1 percentile and the Istat current orders reading is at its 37.3 percentile.

  • Japan’s economy watchers survey has declined broadly in recent months, but recent weakness may overstate the degree of weakening present in the economy at this time.

    Japan’s economy watchers current reading, a diffusion index of assessments, dropped in October to 49.5, down from 49.9 in September and from 53.6 in August. The future index also slipped to 48.4 from 49.5 in September and 51.4 in August. Both the current and the future indexes are slipping, although the current index still has a queue standing in its 67th percentile, barely on the top one-third of values it has experienced since 2002. The future index has a queue standing at its 49th percentile which places it just below its historic median; queue standing statistics put the median at a standing value of 50%.

    The weakness in the indexes recently is quite striking with diffusion data shown at the bottom of the table. The monthly diffusion data calculate the proportion of indexes that are improved month-to-month. Diffusion values for October, September and for August all are at or below their 30th percentile indicating that even in the best month no current or future responses improved for more than 30% of the observations. This tells us that the deterioration is broad based over the last three months.

    The sequential calculations in this table look at point-to-point changes as well. Since these are diffusion data, there's no sense in trying to annualize these data; these are just point-to-point changes and diffusion data. For the current observations, we have a decline of -4.9 points over 3 months, -5.1 points over 6 months and -1.3 points over 12 months. The slippage over 12-months is relatively small; the slippage over 6 months is substantial and because there's a 4.9-point decline over 3 months we can see that most of that slippage has occurred in the last 3 months.

    The future index shows a decline of -5.7 points over 3 months, a decline of -7.3 points over 6 months and an increase of +1.3 points over 12 months. Expectations were slightly better over 12 months than they were a year ago. And once again the bulk of the slippage in this index has occurred over 3 months where 5.7 diffusion points are lost with only 1.6 diffusion points lost over the previous three months (to total -7.3 over six months).

  • Inflation in Germany fell by 0.2% in October on the HICP measure; the core rose by 0.2%. The German domestic measure inflation was zero while the domestic CPI excluding energy rose by 0.1%. On all these metrics inflation performed quite admirably in the October report.

    Not only was the October report good, but in terms of the HICP measure September was excellent as well. In September the HICP had been zero, but the core fell by 0.2%. On the German domestic measure, the CPI was up by 0.3% in September while the CPI excluding energy was up by 0.2%. September numbers for the domestic measure were not as stellar; they were mixed with the 0.3% headline gain being too strong (3.7% annualized).

    Germany’s HICP- Okay, the sequential inflation numbers are behaving- trending. The HICP headline rises by 3% over 12 months, at a 2.4% annual rate over 6 months, and it decelerates to a 1.3% annual rate over 3 months. The core rate on the HICP measure is up 4.9% over 12 months. It settles down to a 3.2% annual rate over 6 months and clocks in at 1.6% at an annual rate over 3 months. That is good progression and once again it brings the 3-month inflation rate down to within the target that the European Central Bank seeks for the euro area as a whole.

    The German domestic gauge- The inflation rate for Germany's domestic measure does not perform quite as well. The inflation rate is at 3.7% over 12 months, that decelerates to a 2.4% pace over 6 months then picks up to a 3.1% annual rate over 3 months. It refuses to dip down inside of the ECB's preferred target band. The German domestic measure for ex-energy inflation rises at a 4.5% annual rate over 12 months, cruises at a 2.7% annual rate over 6 months and then picks up to a 2.8% annual rate over 3 months, once again refusing to fall into the prescribed target range of the European Central Bank.

    Diffusion- Diffusion calculations are executed on detailed domestic data. They show some progress but not the same excellence as the HICP. The HICP is a measure crafted to fit across all EMU members and since members could not agree on how to treat housing costs, they are absent from the HICP. Diffusion values over 50% indicate prices increasing period-to-period faster more than slower while under 50% prices are slowing more than accelerating.

    Diffusion results- Diffusion in the domestic measure shows a reading of 63.6% comparing 12-month price increase to those of one year ago across all major commodity groups. The diffusion measure falls to 27.3% when applied across groups to 6-month price changes annualized against 12-month changes. However, over 3 months the diffusion metric rises to 45.5% comparing the 3-month trend to the 6-month trend across categories- close to the neutral 50% mark. These diffusion data are poor for the 12-month gauge, excellent over 6 months, but then giving a constructive, but weak signal over 3 months.

  • German capital goods trends continue to turn lower in September as industrial production declines; the losing streak for monthly German industrial production now stretches to four months in a row as output falls at a 7.6% annual rate over 3 months faster than its 6.2% annual rate drop over 6 months which is faster than its 3.9% drop over 12 months.

    Broad weakness in output across sectors- The weakness in output at the headline level is echoed by two of the three component sectors and barely violated by one of them. Consumer goods output falls at a 9.6% annual rate over 12 months, falls at a 12.3% pace over 6 months and falls at an extremely weak 23.6% annual rate over 3 months. Capital goods output that manages an increase of 1.2% over 12 months falls at a 3.1% annual over 6 months and then falls at a stepped up 4.1% annual rate over 3 months. Intermediate goods output falls at a 6.1% annual rate over 12 months and falls at nearly the same pace (slightly less, at a 5.7% rate decline) over 6 months but then accelerates to an 8.5% annual rate decline over 3 months. Despite the slight 6-month prevarication, in the trend for intermediate goods deceleration, the signals from industrial output across sectors give a very clear sign of deepening weakness in German manufacturing.

    Construction- Construction output goes its own way a bit more, rising by 2.1% in September, falling in August and rising in July. Construction shows no clear trend in output, but output does rise over 12 months and over 3 months.

    Mainline reports are weak- The mainline reports of manufacturing output, real-orders, and real-sales, show deterioration and all but real orders are consistent with the notion of secular deterioration at an accelerating pace.

    Other indicators’ surveys Surveys show mixed results for changes in values between September and August. However, all surveys show deterioration from 12-months to 6-months and from six months to 3-months based on average data. All surveys are deteriorating on a quarter-to-date basis (that’s with Q3 data now complete).

    Selected other Europe The four countries for other Europe that represent early reporters of industrial output show declines across the board in September. All show IP declines over three months as well; only Portugal shows less weakness over 3 months than over 6 months. All also show declines in IP over 12 months. The pace of the year-on-year declines is replicated or worsened over 6 months except in France.

    WEAKNESS! What emerges from these considerations is a clear picture of deterioration and generally of worsening growth according to IP and indicators for Germany. Industrial output trends for Portugal, Spain. France, and Norway follow suit. It’s a grim picture for manufacturing in September in Europe.

  • German real orders unexpectedly rose in September; however, it's not the surprise that it may seem on the surface. They gain in order was only 0.2% following a 1.9% rise in August; while a gain of 0.2% after a gain of 1.9% might seem significant, those two months followed a decline of 11.4% in July. Because of that, the profile of German orders continues to be negative, with real orders falling 4% over 12 months, accelerating to rise at a 7.1% pace over 6 months, then diving to drop at a 33% annual rate over 3 months.

    Foreign real orders rose by a strong 4.2% in September after a 1.6% gain in August. Those two brisk increases follow on the heels of a much more substantial 12.7% decline in orders in July. Foreign orders rose by 0.8% over 12 months, rose at a 19.9% annual rate over 6 months, then fell at a 27.3% annual rate over 3 months. And 12-months ago year-on-year real foreign orders were falling 13.8%. The table (below) depicts an isolated island of revival in foreign orders over the last 12 months and 6 months that previously had shown order declines and is doing so again over three months. The foreign sector hardly looks like a back-bone of growth to support the German economy through the export sector.

    German domestic orders fared much worse, falling by 5.9% in September, rising by 2.3% in August, and falling by 9.2% in July.

    Sequential orders fell by 11% over 12 months, fell at a similar 10% annual rate over six months and fell at a 41.4% annual rate over 3 months.

    None of these categories make orders look anything like ‘firm’ or ‘solid,’ let alone ‘strong.’ But the domestic situation is clearly the worst.

    Sales trends- abysmal Real sales trends across sectors show declines in all categories in September. All categories show declines over 3 months as well. Over 6 months, only capital goods showed a rise with the other metrics for real sales falling. Over 12 months, again, all categories showed declines except for capital goods sales. Real manufacturing sales declined by 2.5% over 12 months. That improved technically to a 2.4% annual rate drop over 6 months, then, over 3 months sales plunged at an 11.3% annual rate.

    QTD trends Quarter-to-date (QTD) trends show orders falling overall as well as for foreign and domestic orders – led by extreme domestic weakness. Real sales by sector register declines in all categories as well, led by weakness in consumer durables.

    European conditions Industrial confidence, according to the EU Commission measures, shows net negative readings in September for Germany, France, Italy, and Spain. Month-to-month conditions improved in Germany and France but deteriorated in Italy and Spain. Over 3 months, however, all four countries show conditions weakening; conditions also weaken over 6 months compared to 12 months. In the quarter, all four countries have EU Commission readings that are below historic median in each of these countries.

  • In September, the unemployment rate rose in the European Monetary Union to 6.5% from 6.4% in October. The rate had been chopping around between 6.5% and 6.4% over the last four months. There's nothing decisive about this rate increase except that the rate has stopped moving lower. The unemployment rate has gone from its trend of persistent declining to a period of waffling and failing to be able to make a new low. This begins to look more like the end of a run for the declines in the unemployment rate and the European monetary system. And given how far the decline has come, it's not surprising.

    Some members still experience falling rates of unemployment- In September the unemployment rate fell in only one monetary union member in the table, and that is Greece where the unemployment rate fell quite significantly from 10.6% in August to 10% in September. Greece has the second highest unemployment rate in the table exceeded only by Spain at 12% in September. Greece is the only country in the table with the unemployment rate falling for three months in a row. Greece is also the country that is making the most progress overall in reducing its unemployment rate that is lower by 2.1 percentage points over 12 months. Among the twelve countries in the table, only five have net-lower unemployment rates over 12 months. That pack is led by Greece, followed by a 0.9 percentage point decline in Spain, a 0.6 percentage point decline in Italy, a 0.2 percentage point decline in Ireland, and a 0.1 percentage point decline in Germany.

    Broadly low rates across the monetary union- The lowest unemployment rate in the monetary union among countries in the table is Germany at 3%. However, the lowest ranking unemployment rate in the table belongs to Ireland where its 4.2% unemployment rate sits in the lower 5.5 percentile of its historic queue of unemployment rates. That compares to a 6.7% standing for the nominally lower German rate. It points out that the relativity in these unemployment rates differs across countries and helps to explain why for the monetary union the overall EMU rate standing is at 2.1 percentage points, a lower standing than any country in the table. It's because the coincidence of low unemployment rates across all these countries is very unusual and has contributed to an unusual and extremely low unemployment rate for the monetary union itself.

    Declining unemployment rates are becoming scarce- However, declines in unemployment are becoming rarer over three months; only two countries have unemployment rates lower over three months; they are Ireland and Greece. Over six months, four countries have lower unemployment rates: Portugal, Greece, Spain, and Italy. Over 12 months, unemployment rates fell in five countries and rose in seven countries.

    Below-median unemployment rates are a common feature- Still, unemployment rates across the monetary union are low; they're below the medians for all countries except two. Only Luxembourg and Austria among country members in the table log employment rates above their 50-percentile mark which means they're above their historic medians for this period.

  • Switzerland
    | Nov 02 2023

    Swiss Inflation Remains Contained

    Inflation in Switzerland continued post solid low inflation numbers as the headline rose 0.1% in the HICP measure for the third month in a row. The Swiss CPI measure rose by 0.1% in October, the same as in September and compared with a 0.2% increase in August. Switzerland’s core measure rose 0.2% in October after being flat in both September and August.

    Switzerland continues to have outstanding inflation performance and continues to consistently outperform Germany as well as the European Monetary Union in this regard.

    Sequential inflation rates measured on the HICP scale show 2% inflation over 12 months, decelerating to a 1.7% pace over six months and decelerating to a 1.1% annual rate over three months. The Swiss CPI is up by 1.7% over 12 months and at a 0.9% pace over six months; it accelerates to a 1.5% annual rate over three months. The Swiss core rate is up by 1.5% over 12 months, and at a 0.5% annual rate over both six months and three months.

    These numbers are the envy of all other central banks during this period. Globally, inflation has flared, and central bankers have overshot their targets consistently. Switzerland has been able to contain inflation better than in other central banks.

    Looking at the inflation rate annualized since January 2020, before COVID struck, the Swiss HICP measure is up at a 1.8% annual rate; the domestic measures is up at a 1.8% annual rate as well; the Swiss core rate is up at a 1.2% annual rate. Excluding Swiss administered prices, inflation is up at a 1.7% annual rate over the same span.

    Inflation detail for October shows some acceleration for inflation month-to-month. The core rate is up to 0.2% compared to a 0 percent change in September. Excluding administered prices, inflation rose by 0.3% in October compared with a 0.1% decline in September. Food & beverage prices rose 0.4% in October compared to -0.2% in September; health costs were flat in October after falling by 0.1% in September; recreation & culture events saw prices rise by 0.3% in October after falling by 0.1% in September. The catch-all ‘other goods and services’ saw prices rise by 0.2% in October after being flat in September. None of these changes is particularly concerning in the monthly report.

    Over three months, the Swiss HICP measure decelerates, the Swiss core measure is unchanged, compared to its six-month pace and the Swiss domestic headline measure accelerates to 1.5% after a 0.9% rise over six months. Categories showing prices accelerate over three months compared to six months across the board. Accelerating most sharply over three months are clothing & footwear prices that rose at a 35.1% annual rate, but the series is not seasonally adjusted. There is acceleration posted in transportation as well as in health and recreation categories; however, among these three categories two of those three log price declines on the month. Yet all three categories show price acceleration because prices declined substantially over six months! Education costs accelerated and they're also not seasonally adjusted, but they rise from a 1.8% pace over 12 months to a 3.6% pace over six months to an annual rate of 7.3% over three months. That progression is suggestive of true underlying price pressures. The other goods & services category shows consistent pressure but just by a tick period-to-period.

    The Swiss unemployment rate remains low at 2.1% in September, the same as August six-months ago. The rate had been as low as 1.9%; a year ago it was at 2.1% and two years ago it was at 2.9%. Since COVID struck in January 2020, the unemployment rate is lower by 1.4 percentage points. The Swiss economy is performing very well on the inflation front. But in real terms, the economy is beginning to experience some slowing even though it is not reflected in the rate of unemployment yet.

  • The Standard and Poor’s measures for manufacturing unemployment globally show somewhat mixed results tilted to weakness I went in October as 7 of 18 improved month-to-month while 11 of 18 worsened. The median observation for October fell by 0.6 diffusion points to 48.7, a value that indicates manufacturing contraction overall among this broad sample of reporting units.

    Sequential trends Sequential trends show 8 of 18 reporters with improved manufacturing PMIs comparing average levels over three months to six months ago. Comparing average levels of six months to 12 months ago, ten of them are improved out of 18. The six-month mark shows that there has been a broad improvement compared to 12 months ago; however, over 12 months compared to the period of 12 months earlier, there is broad weakening; only five reporters show stronger values over 12 months than over 12 months ago.

    Rankings Ranking data that assess the current October levels of the PMI among all data since January 2019 show that the average standing among that queue of values for these reporters is at the 26th percentile; that’s right at the bottom 25% of all observations for the period. This marks the current manufacturing set of estimates as quite weak. Mexico and Russia show percentile standings around the top ten percentile of data over this period. Only 4 reporting units show PMI values that are above their medians which means above the ranking of 50%; one country, South Korea, is right at its 50% mark. The two countries that are above their medians are above them moderately: India with the 59.6 percentile standing and Indonesia with a 57.7 percentile standing.

    Compare to pre-Covid Compared to data back to January 2020, only four reporters show stronger values for manufacturing PMIs: Russia (if you believe it), Mexico, Indonesia, and India. South Korea sits at the same mark it had in January 2020.

    On balance… On balance, manufacturing remains quite weak globally with little sense of momentum. The median for the PMI values from 12-months to 6-months to 3-months has crept higher but very little, moving from 48.5 to 48.6 to 49.1. These metrics compare to an October stand-alone median reading at its 48.7 percentile – weaker again.

  • Third quarter GDP in the European Monetary Union weakened and surprisingly contracted. GDP fell at a 0.4% annual rate in the third quarter after rising by a 0.6% annual rate in the second quarter. The unexpected drop has naturally raised questions about the possibility of a rule-of-thumb recession occurring in Europe (some report this as a ‘technical’ recession. However, there's nothing technical about two declines in a row {counting ‘all the way’ up to 2.} Rather, it is a rule-of-thumb that sometimes makes sense, and sometimes does not). We are reminded that in the first and second quarters of 2022, real GDP in the United States declined, with GDP falling at a 0.5% annual rate in the first quarter and then edging lower by a 0.1% at an annual rate in the second quarter. Almost no one called that a recession. Those that did probably did so more for political reasons than for economic reasons. The U.S. GDP drops were not considered to be part of a recession in the U.S. by anyone who looked at data seriously. The ongoing substantial growth in employment in the U.S. during those two quarters made the drops in GDP oxymoronic recession signals. This reference highlights the fact that recessions are more complicated than just a couple of numbers’ weakness quarter-to-quarter and it has a lot more to do with the economic processes that might be in play.

    Europe....no recession but LOTS of weakness Right now, in the European Monetary Union, Italy reports a 0.4% GDP decline in the second quarter and flat GDP in the third quarter. Apart from that, no other early reporting country is flirting with a rule-of-thumb GDP definition. However, it's quite clear that there is a lot of weakness. • Germany, for example, shows low growth; it has GDP up by 0.1% in the second quarter after being flat in the first quarter and it has a decline in GDP in the third quarter, to go along with the decline in GDP in the fourth quarter of 2022. Germany, in the last four quarters, shows two declines in GDP, one quarterly increase of 0.1% (annualized) and another quarter which GDP growth was flat. We can certainly argue about whether this constitutes some kind of recession in Germany. It certainly constitutes an extremely weak period of growth for the German economy. • Ireland has two previous quarters of negative growth in the fourth quarter of 2022 and in the first quarter of 2023. That string is interrupted by a 0.5% increase in the second quarter and now a 1.8% annual rate decline in the third quarter. Ireland has three GDP declines in the last four quarters. • Portugal logs a decline in GDP in 2023 Q3 after an increase in Q1 of only 0.1% annualized. • The four largest European Monetary Union economies show tepid growth at a 0.1% annual rate in the current quarter after two quarters in which the annual rate for growth was 0.2%. They were preceded by one quarter in which GDP in the four largest economies fell at a 0.1% annual rate.

  • Consumer confidence in Finland moved lower again in October as a new round of weakening appears to be well underway. The graphic shows a clear turning in confidence although the clear turning is not yet represented in sequential averages in the table that show a -11.4 measure over 12 months, -9.8 over six months, a reading that reflects some improvement compared to the 12-month measure, and then further deterioration to -10.7 over three months. The failure of the sequential averages to show what appears to be ongoing and steady deterioration is an artifact of where we are in the cycle of deterioration. Ther is no waffling of the trend, as you can see.

    The table (below) also presents the queue standing of confidence in October at 4% which tells us it's been lower historically only 4% of the time (ranking are on data back to 2000). However, this is an improvement from a year ago when the rank was 0.4%.

    The Economy, now- The reading for Finland's economy now in October has improved slightly from September, moving up to -40.9 from -42. The expectation for the economy in 12 months, however, is weaker at -18.8 in October compared to -18.1 in September. These two economy readings, one for now, and the other for 12 months ahead, are both substantially weaker than the numbers that were posted in August just two months ago. The rankings, however, are improvements from what they were a year ago but are both still below their respective lower 15-percentile, marking the responses as still extremely weak.

    Inflation- Consumer price inflation in one year is expected to be slightly higher. The move up is not so impressive; but what's impressive here is that there's no improvement expected. Meanwhile, Finland is a member of the European Monetary Union and is still subject to the ongoing tightening and efforts of the European Central Bank that claims to be focused on reducing inflation back towards its 2% target.

    Unemployment- The prospect for unemployment over the next year has been reduced in October from September and both October and September show weaker readings that are significantly weaker readings than in August. Bringing the unemployment question home to roost, we see that individuals are also less threatened by the more immediate prospect of personal unemployment; their concerns about personal unemployment are diminished in September compared to August and in October compared to September. Ranking these two unemployment measures historically, the risk of overall unemployment has an 18.5 percentile standing while the risk of personal unemployment has a slightly higher 24.2 percentile standing. Both standings are substantially reduced from what they were one year ago when concerns about unemployment were about twice what they are right now in October 2023.

    Environmental perceptions Good time to purchase durable goods?- The favorability of the times to purchase durable goods have not changed very much over the span of the last three months although conditions have slightly improved. Nonetheless, the historic ranking of this metric is in its 3.6 percentile, marking it as rarely weaker and therefore marking the slight improvement as a Pyrrhic victory.

    Favorable time for saving?- Perceptions of the favorability of the time for saving have worsened slightly over the last three months and the metric has a 1.1% standing. The rankings for the ‘favorability of the time to purchase durable goods’ and the ‘favorability of the time for savings’ one year ago both were at historic lows. Over the past year there has been some improvement but very little. The real story remains that consumers still seem to feel that their backs are to the wall.

    Bank loans- The favorability of the time for raising a bank loan has worsened over the last three months. The historic ranking of that response is lower only 0.4% of the time. And the ranking of this metric is slightly worse than it was 12 months ago.

    Household financial situation- The overall household financial situation eroded in October compared to September and is also lower than the August reading. At a level of 20.5, it's on its 12-month low. The queue standing for this measure is roughly in the lower 10% of its historic queue of values and it has deteriorated sharply from a year ago when the queue standing was still quite solid in its 81st percentile. This very sharp deterioration reflects a clustering of readings on the financial situation in the mid-20s for this metric historically so that a relatively minor-seeming drop (to 20.5 from 27.4) crashed the overall standing of the response from 80th to the 10th percentile in terms of its historic ranking! On one hand, the financial situation has not been assessed as that much weaker than before; on the other hand, it has still fallen to a historically weak reading. This phenomenon may have something to do with the socialistic nature of the economy and people seeing their lot largely as like everyone else, and with that may come some denial in the willingness of people to recognize deterioration when it happens. Certainly the 81-percentile ranking of one year ago seems more out of line with other year-ago responses than the current 10-percentile ranking amid the 2023 responses.

    Savings- Household possibilities for savings over the next month are ranked as slightly stronger month-to-month but weaker in October than in August. September marked a 12-month low on this reading. The October ranking for this measure is low at 3.3% while a year-ago the ranking was at 13.6%. The assessment of the conditions for saving over the next 12 months has worsened over the year.

  • In this situation, the Insee survey on household confidence in France showed a small uptick in October although that still leaves it short of its August level and leaves it at a weak ranking on data back to 2001. Ranked on that timeline, confidence currently has a 10.6 percentile standing, implying that it has been this weak or weaker only about 10% of the time during that period.

    Strength in the survey is rare- Most of the components of this survey are weak. The exceptions are price developments, of course, because inflation is still high. Inflation over the last 12 months saw an uptick in the assessment in October compared to September and an overall ranking in its 95th percentile. However, expectations for the next 12-months show a slight reduction for inflation that's anticipated and a ranking that is only in its 12.8 percentile, indicating that inflation is broadly expected to be on a declining profile ahead. The other component that has higher standing is the assessment of savings. This is usually a negative barometer since when spending conditions are poor savings conditions turn out to be better and that's true this month in the Insee survey. However, month-to-month the assessment ‘favorable to save’ fell relatively sharply to 28 in October from 36 in November as the ‘ability to save’ for the next 12 months was unchanged. Even so, with the sharp drop this month, the ranking of the favorability for savings has an 82.8 percentile standing and the ranking of the ability to save has an 88.3 percentile standing.

    Weak living standards: But unemployment expectations are a positive- The rest of the surveyed components show anything from substantial to extreme weakness. The living standard assessments show past living standards unchanged month-to-month and with a 2.2 percentile standing. This implies that living standards over the last 12 months have been that bad or worse only about 2% of the time. Over the next 12 months, living-standard expectations improve slightly but still only register at 18.6 percentile standing - a standing in the bottom 20% of the historic queue of data looking back to 2001, a period of just over 20 years. Unemployment expectations over the next 12 months fell slightly in October to a reading of 17 from a reading of 20 in September. This has a 29.9 percentile standing. In this case, the low standing is relatively good news because it means expectations for unemployment are relatively low.

    Spending environment has rarely been worse- The environment for spending deteriorated slightly on the month with an October reading that fell to minus 45 from minus 44 in September. The ranking of this reading is in the bottom one-percentile of all readings back to 2021. French respondents to this series find this an extremely unfavorable time and make major purchases, having been this bad or worse only about 0.7% of the time over the last 20 years – the third worst year for major purchases back to 2021 (worse only in June 2023 and in April 2020).

    The financial situation is poor- Given the poor outlook for the spending environment, it's not surprising that the financial situation also gets low marks. The situation over the past 12 months improved just a tick from September, but the response has a low, 9.9 percentile standing implying that it's been this bad or worse only about 10% of the time historically. Looking over the next 12 months, there's another small two-tick improvement in the survey that produces a ranking in its 35th percentile. That's still nearly a bottom 1/3 standing for the expected financial situation – an improvement compared to the bottom 10-percentile. It's a weak reading, but not as weak as some of the other assessments in the table.

    Weakness in past living standards, spending and the past finical situation seem to play a large role in setting the bar of assessments so low in October. The overall confidence indicator has a 10.6 percentile standing.

    The turbulent wake of COVID- Much of this weakness has come in the wake of COVID. Comparing household confidence, for example, in October 2023 to its level in January 2020 before COVID struck, the measure is 20.4 points lower than it was in early-2020. The assessment of past living standards is 41.9 points lower and the expected living standards are 26.5 points lower. The response on the unemployment rate is about 11 points higher than it was in January 2020. The inflation, of course, is much worse with past price developments up by nearly 100 points, but then, of course, the expected future expectations are lower only because inflation is high, and it's expected to unwind to some extent. The spending environment is worse than it was in January 2020 by some 38 points. The financial situation in the past 12 months is worse by 16.8 points than it was in January 2020 and the financial situation expected in the 12 months ahead is worse by 12.9 points – what they did not know in January 2002 nonetheless hurt them badly. Remember that expectations are just that and nothing more.

  • The U.K. distributive trades survey covers retail sales and wholesaling, providing assessments of current activity as well as expectations for the month ahead. October is a mixed report with retail sales weakening and wholesaling showing some improvement. However, the outlook for both retailing and wholesaling deteriorates in November. All ranking statistics are weak except for inventories.

    U.K. retailing Current assessment- In retailing, sales compared to a year ago in October fell to -36 rating from -14 in September. The sales responses have been somewhat volatile recently; however, the October reading of -36 is well below the 12-month average of -13. Orders compared to a year ago also slipped to -37 from -19; that response compares to a 12-month average of -24. Sales assessed for the time of year slipped to -10 in October from +5 in September. Those readings compare to a 12-month average of zero. Stocks relative to sales moved up to +27 in October from +6 in September, above the 12-month average of +17. An increase in the stock to sales ratio while sales are weakening is not generally a good sign. The ranking statistics on the table rank the current responses on the timeline back to March 2000. On that timeline, the performance of sales over a year ago has of 5.6 percentile standing. Orders compared to a year ago have a 6.3 percentile standing. Sales assessed for the time of year have a 36.6 percentile standing. The stock-sales metric has a 91.2 percentile standing. These are all quite weak assessments, and the stock sales ranking does not appear to be good news with sales weakening.

    Retail outlook- The retail outlook for the categories listed above all show deterioration month-to-month except stock stock-sales response which rose. The outlook assessments are below their 12-month averages but only slightly below the average for sales performance over one year. The ranking metrics and the responses are all still extremely weak. The stock-sales ratio again has a strong standing in its 86.7 percentile.

    Wholesaling survey Current assessment- In wholesaling, in October sales compared to a year ago improved to -15 from -23 in September. The October -15 reading compared to a 12-month average of -11. Orders compared to the year ago, however, deteriorated to -25 from -15 and those figures compared to a 12-month average of -15. Sales for the time of year improved to -1 in October from -3 in September but compared to a stronger +8 average over the last 12 months. The stock-sales ratio response in October fell to 10 in October from 43 in September and compared to an average of 18 over 12 months, indicating a very different inventory conditions and dynamics for wholesaling than in retailing. In terms of rankings, the performance of sales compared to a year ago reveals a 16.5 percentile ranking. Orders have a 10.9 percentile ranking. Sales for the time of year have a 29.9 percentile ranking and the stock-sales ratio has a 39.1 percentile ranking. All these are still quite weak with the stand-out feature being that the stock-sales ratio isn't moving in the opposite direction as it is for retailing.

    Wholesale outlook- The outlook portion of the wholesale survey for November shows weakness across the board. All these metrics show month-to-month deterioration and much weaker performance in November than over the last 12 months. The stock-sales ratio for November falls to a metric of +16 from +37 in October but October clearly was an outlier strong-reading. The November value of +16 is only slightly above the 12-month average of +14 - an exception among this month’s responses. Looking at the rankings of these various metrics, we continue to see weak readings for the outlook across the board. The stock-sales standing at a 65.6 percentile is firm but not a worrisome reading, particularly with the stock-sales ratio in November being close to its 12-month average.