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| Apr 03 2025
Global Composite PMIs Move Sideways
The composite PMI readings for March show 19 readings by month or time segment. In March nine of those get worse month-to-month. Six jurisdictions are below 50 indicating overall economic contraction; those six are France, Russia, Hong Kong, Japan, Zambia, and Egypt. This compares to only two below 50 in February (France and Hong Kong) and four in January (France, Italy, Brazil, and Singapore). These lists demonstrate it is not like these countries are mired in contraction; countries seem to come and go from the category of contraction except for France that contracts in all three months as well as over three months, six months and 12 months, based on average values. Hong Kong contracts in March and in February as well as over three months on average and on average over 12 months, but not over six months. Egypt contracts over three months, six months, and 12 months as well.

However, the above are the exceptions From January 2012, the average percentile standing for the 19 countries in their respective data queues as of March 2025 is a reading of 46.1%. But the median reading among all these standings is at 50% which marks the overall median. These factors suggest that the overall health of the global economy based on the composite readings here is near its median.

Sequentially, nine reporters are weak over three months compared to six months, then twelve are weaker over six months compared to 12-months, and three them are worse over 12 months compared to their averages of 12-months before.

Ten reporters have rank values above 50%, which places them above their respective individual medians.

The strongest rankings are 83.3% for Nigeria and 78.6% for Egypt. The weakest readings are 4.8% for Japan and 9.5% for Hong Kong. Among the U.S., EMU, Germany, The strongest rankings are 83.3% for Nigeria and 78.6% for Egypt. The weakest readings are 4.8% for Japan and 9.5% for Hong Kong. Among the United States, EMU, Germany, France, Italy, Spain, and the United Kingdom, the average standing is at 48.6% and the median is 54.8%. Only France, Italy and the U.K. have standings below their respective 50% marks on composite readings for this grouping of advanced economies- of course, we just saw Japan was much weaker.
by:Robert Brusca
|in:Economy in Brief
Global| Apr 02 2025
Global MFG PMIs Erode in March
The median reading for the 18 early reporting manufacturing sectors in the table (17 countries plus the euro area) is lower in March at 48.7 from 49.5 in February. Also, in March the diffusion (breadth) of reporters showing month-to-month improvement fell to 33.3% from 66.7% in February and 61.1% in January. However, diffusion over broader periods (3-mo vs. 6-mo; 6-mo vs. 12-mo and 12-mo vs. 12-mo ago) shows diffusion has been steadily at and above the 60% mark (them as point-to-point diffusion changes). And on those timelines, the median reading for the 12-month average is at 49.8, the 6-month average is at 49.3, and the 3-month average is at 48.7. Despite improving diffusion, the median reading has been slipping, but the slippage has been extremely slow. For the United States, France, Germany and the euro area - as a block - these three, blocs of time show diffusion improving in 10 of the twelve segments, the two deteriorating segments are for comparison with a year ago in the U.S. and comparisons between the 6-month average and the 12-month average for France. All four reporters show improvement in three-months compared to six-months, based on average data. By comparison, the four BRIC countries show only two improvements among the 12 possibilities, and only India shows improvement in three-months compared to six-months.

According to breath, this is ongoing improvement. But median data are not confirming the trend. It’s just another example of how small the current changes are and how the data can show small changes over periods as long as a year, when in reality all we are experiencing are gyrations, and little change in an essentially static environment.

The queue standings (rankings) show only seven of 18 reporters at or above the 50% mark; this is the demarcation line for the median on these ranked data. So, over the last four years data, are arrayed with slightly less than half above and slightly more than half below their respective medians. However, the median reading of these rankings makes it clear that data tilt to the weak side at a 45-percentile standing. On data from January 2021 to date, all March 2025 readings are lower on balance (except India-and that exception is on a small margin, +0.3 points).

In that table, I look at various groups: BRICS, Asia, and a group of the more advanced countries (U.S., U.K., EMU, Canada & Japan); each of them shows very little movement.

However, we have a world with a great deal of change in train, especially changes thrust on Europe by changing U.S. policy to put more of Europe’s own security provision in Europe’s on hands. This is going to ramp up spending and should cause economies to heat up in the year ahead or more. Such a change could spur PMI values, economic growth, stimulate the inflation environment, and alter monetary policy itself. There is change in progress that we can see coming but has not been reflected in this month’s report.
by:Robert Brusca
|in:Economy in Brief
Japan| Apr 01 2025
Tankan Bellwether Edges Down
The large industrial companies that form the most important vanguard readings for this report are the weakest in the first quarter with manufacturing backtracking to reading of +12 from +14 in the fourth quarter. That +12 reading is below its four-quarter average of +13.0. Large nonmanufacturing firms, however, stepped up with a reading of +35 in the first quarter up from +33 in the fourth quarter to the highest standing since the third quarter of 2006, which is the period over which we rank these data. The large manufacturing bellwether reading has a 66.7 percentile standing, while the total industry reading is static at +23 for the first quarter with the percentile standing and its 97th percentile.

The outlook for large manufacturing companies also stepped back to +12 in the second quarter from +13 in the first quarter. Its four-quarter average is +13.3 and that leaves it with the ranking at its 67th percentile quite similar to the current reading for the first quarter for manufacturing. Nonmanufacturing remained at a reading of +28 for the third quarter in a row; this is a second-quarter of 2025 reading; it's one-year average is +27.8 and at +28 this is also the highest outlook reading for nonmanufacturing on this timeline. The total industry reading has an outlook in the second quarter of +20.0, the same as the first quarter, down slightly from the fourth quarter; it compares to a four-quarter average of +20.3 and has a queue percentile standing in its 92nd percentile.

The outlook readings, for the most part, are firm-to-strong. Unfortunately, the manufacturing readings are the weakest; instead of being on their 90th percentile like the total industry and nonmanufacturing, manufacturing readings have 66th percentile standing which leaves them only at the lower border of the top third all readings since 2006.

Nonmanufacturing industries show the strongest readings with 90th percentile standings for transportation, restaurants & hotels, wholesaling, and services for businesses. Among the other reporting nonmanufacturing sectors, the standings are in their 80th percentiles or higher except for personal services that has a softer 70th percentile standing.

Compared to the period just before COVID, all sectors are higher except for services for businesses and personal services that are each one or two points lower than they were in the fourth quarter of 2019 before COVID struck. The strongest advances from the pre-COVID reading are from restaurants & hotels with the 35-point rise in their index, as well as retailing, and real estate each with 24-point increases in their respective indexes; wholesaling has a 22-point rise in its index. Large firm manufacturing overall has a 12-point rise in its index on that timeline while construction has an increase of only two points.

The responses for medium- and small-sized firms are not considered to be harbingers in this survey, but for manufacturing both medium- and small-sized firms have rankings in their low 80th percentile while the nonmanufacturing rankings have standing in their 97th and 98th percentile. However, the outlook for medium- and small-sized firms carry percentile standing in their 70th percentile for manufacturing. There still are readings with rankings in the high 90th percentiles for the nonmanufacturing sector that continues to be quite strong across Japan regardless of the size of the firm reporting
by:Robert Brusca
|in:Economy in Brief
Europe| Mar 31 2025
Some Hopeful Signs in European Inflation Trends; But Are the Signals Good Enough Given the Circumstances?
The Circumstances- The chart of the three largest EMU economies and their HICP inflation rates shows clearly that year-over-year trends and inflation in France have broken lower while Italy, that has long had the lowest inflation rate in the monetary union among the four largest economies, is on a mild uptrend. Germany has made a very small re-set as inflation has broken lower in the short-run, but German inflation year-on-year actually would still appear to be in a slight uptrend.

There is good news- Despite these broader views, there is some excitement over this month’s inflation statistics from Germany. German inflation has fallen by 0.2% in March after rising by only 0.1% in February and in January. The annual rate change for inflation in Germany over three months is -0.3% which compares to France at -2.1%. These are clearly good inflation developments for the two largest economies in the monetary union; however, Italian inflation over this period is at a 5.7% annual rate while Spain's inflation is at a 1.2% annual rate. Among the four largest monetary union economies, three of them have short-term inflation rates well inside of the ECB's targeted pace for the union as a whole; however, the picture is far from completely clear.

There are reasons to be cautions in digesting the ‘good news’ - Italy shows a clear acceleration for inflation from 2.2% over 12 months to 2.8% over 6 months to a pace of 5.7% over 3 months; that acceleration is uncomfortable. For Germany, the year-over-year inflation is in excess of the EMU-wide target at 2.5%, and still excessive at 2.6%, and accelerating slightly over six months, but then it breaks sharply lower over 3 months to that -0.3% pace. France has relatively clean results with a one way read on inflation. Over all horizons, inflation’s pace is below the 2% mark and decelerating to boot running at a 0.9% annual rate over 12 months, followed with a 0.2% annual rate over 6 months, and then clocking -2.1% at an annual rate over 3 months. Spain is a good example of the mixed situation for European inflation as over 12 months it's 2.3% pace is slightly above the 2% that the ECB seeks for its EMU-wide target; over six months Spanish inflation steps up to a 3.4% annual rate, clearly excessive on everyone's radar, but not really worrisome, then, over 3 months, Spanish inflation settles down to only 1.2% at an annual rate- highly copacetic.

The inflation overview: numbers and their trends- Summing up what we have here are three countries with 12-month inflation above the 2% pace. France is below it at 0.9%. We also have three countries with inflation above the 2% pace over 6 months with France as the exception again at only 0.2% over 6 months. In addition to that, two of the three countries show acceleration over 12 months compared to 12-months ago, and over 6 months compared to the 12-month pace, inflation accelerates in three of these four countries. It's possible to look at these data and find good news; however, it's also possible to look at these data and find that the news does not appear to be quite so good.

Beyond the headlines- Turning to the core inflation rates for Italy and Spain, we see that both of the core rates for those two countries are at 2% over 12 months within the ECB's desired parameters and a green light for any pending rate cut decisions. Italian core inflation runs at 1.9% over 6 months with Spanish core inflation at 1.7% over 6 months also acceptable paces to the ECB. Over 3 months the Italian core picks up to 2.4% annual rate while the Spanish score remains at 1.4% and as part of a decelerating process for Spanish core inflation from 12-months to 6-months to 3-months.
by:Robert Brusca
|in:Economy in Brief
Europe| Mar 28 2025
EU Indexes Show Slight Erosion
The EU commission's overall reading for the European Monetary Area unexpectedly eroded, dropping to 95.2 in March from 96.3 in February, leaving it also below its January 2025 level but above its December 2024 level. It may simply be too soon for this survey to reflect any of the changes going on in Europe. But very clearly a ramp up in military spending is planned and economic conditions in the monetary union and beyond are about to receive a significant boost. While that development might be simply too new to have gotten into the indexes as of March, it is still in train so curb your disappointment.

EMU in March by Sector March readings for the monetary union show the industrial sector unchanged at -11 from February but showing improvement compared to both the December and January readings. Consumer confidence slipped in March to -14.5 from -13.6 in February and it's below its January and December levels as well. Retailing slipped to -7 in March from -5 in February and it also is below its string of readings since December of last year. Construction spending at -3 posted the same reading it logged in February and in January and those were slight improvements from December. The services reading in March slipped to +2 from +5 in February and it is also below its reading of +6 in January.

Country Readings Country level data show readings for 18 of the monetary union members; of these 18, only 6 have percentile standings for overall indexes that are above their median (a ranking of 50%) calculated on data back to 1990. Only one of the four largest countries has a reading above its median and that's Spain at a standing at 51.4% Other large countries show much weaker readings with Germany at a 16-percentile standing, Italy at a 37-percentile standing, and France at a 37.5 percentile standing. Month-to-month changes show deterioration in nine of the 18 reporting countries. This compares to a deterioration in eight in February and compares to January when six weakened relative to December. It is a worsening trend but based on developments in military spending to shore up NATO. Europe supported defense systems must carry more of the load. This will imply stimulus across the board coming for the monetary union.
by:Robert Brusca
|in:Economy in Brief
Europe| Mar 27 2025
Euro Vehicle Sales Falter and Flatten in February
European vehicle registrations falter and flatten in February. The month-to-month changes for a decline of 0.9% in February; year-over-year vehicle registration growth is -3.9%. The chart makes it clear that country-by-country the growth rates have been closing in on fairly unchanged levels of activity with a slight bias to contraction.

Country-by-country year-over-year sales results are strongest for Spain with the 10.4% increase, France with the 1.7% increase, the United Kingdom with a 2.4% drop, Italy with a drop of 6.2%, and Germany with a drop of 7.1%. These numbers translate into a 3.9% decline year-over-year for the total. If we look at smoothed data updated from three-month moving averages, there's a decline of 1.4% year-over-year, just to get a less volatile read.

Despite the year-over-year declines that are more prevalent than increases, the sequential trends show vehicle registrations trending more toward acceleration. There is clear acceleration registered in Italy and the United Kingdom. After that, there's certainly a very strong hint of very strong acceleration in both Spain and France. I say that because the year-over-year gain for Spain is 10.4%, while the three-month gain goes up to 32.1% at an annual rate (!); however, that is a step-down from the six-month growth rate of 47.6% at an annual rate so it's not exactly a clear accelerating trend but certainly three- and six-month growth rates are far in excess of the 12-month growth rate. We see the same thing happening in France with a 1.7% year-over-year growth rate compared to a 23.1% annual rate over three months, but that three-month rate is a step-down from the six-month pace of 27.7%. Because of that, I can't classify those two countries as accelerating but clearly something very positive is a foot.

If we turn to look at ranked data, we find the ranking of year-on-year sales growth is at 20.2% overall growth rates since 1995 – weak and unimpressive. Country rankings range from low 7% rank for Germany to a high of a 46-percentiel standing in the U.K. All rankings are below 50%, below their respective historic medians. We can also rank the same data in terms of the pace of unit sales. In Europe, the pace of unit sales (units sold per month or per month at an annual rate) there is a 33-percentile standing on all unit sales data since 1995. The auto sector pulled back after the Great Recession, it recovered into Covid, then suffered further downward pressure after the invasion of Ukraine by Russia. Since then, there has been a much more modest recovery leaving the pace of unit sales closer to the lows reached after the Great Recession than to its pre-Great Recession mark. Europe’s auto sector may be recovering but it is doing so slowly and sporadically, and it has a long way to get back to trend.
by:Robert Brusca
|in:Economy in Brief
France| Mar 26 2025
French Household Confidence
In March, household confidence in France sank after rising in February. The index now resides below its level in January. Since early in this new millennium, confidence resides at its 36.2 percentile, a standing that is just above the lower one-third of its queue of outcomes over that period. The median result lies at a ranking of 50%. The mean level for confidence over this period is 96.5. Living standards for the next 12 months are weaker at -50 compared to -47 in February. The past standard has a standing in its 32nd percentile while the period ahead registers an expectation with a rank standing in its 21.9 percentile, just above its lower one-fifth mark.

In March, the evaluation of past living standards over the past 12 months improved very slightly to -69 from -70.

Among the good news in this survey is the drop in unemployment expectations in March to 46 from 54. Still, unemployment expectations rank at their 63.1 percentile which is above their median and mean - the mean for unemployment expectations is lower at 33. So, the good news is that unemployment expectations have fallen, but the bad news is that they are still elevated.

There is good news on price developments. Expectations for a drop increased in the March reading in the past 12 months; they increased to -7 from -5. The March reading has a 43.9 percentile standing, below its mean and its median. Looking at the next 12 months, inflation expectations are a touch less optimistic at -41 in March compared to -43 in February. The ranking for 12-months ahead has a very low standing at its 22.6 percentile, marking the small giveback in expectations in March as inconsequential.

The environment for saving and being able to save are both little-changed month-to-month and both also have extremely high standings in the high 90th percentile.

The favorability of the environment for making major purchases improve slightly in March continuing a modest trend higher. Still, spending favorability ranks as weak in its lower 26.2 percentile.

The financial environment was little-changed in its evaluation of the past 12 months; but looking ahead, a sharp deterioration to -11 was posted for the next 12 months compared to a reading of -4 in February. The financial situation over the past 12 months has an evaluation with a standing in its 60.1 percentile, above its historic median, but switching to an outlook 12-month ahead yields a rank standing in the 44.5 percentile just below its median and one point below its mean.

Since Covid and Since the Russian Invasion The final two columns show changes in survey responses since before Covid stuck and since the Russian invasion of Ukraine. We do this in two-steps looking at the change from levels just before Covid struck to the threshold of the invasion, then from the invasion to the up-to-date readings. From Covid, things were improving to early 2022; then since the invasion, consumer conditions are worse by 4 points. Expected living standards rose 8.5 points into the Covid recovery but since the invasion conditions are 11.9 points lower. Unemployment expectations were higher by 14.2 points in early 2022 but after the invasion they rose sharply by 62 points! Post Covid eventually inflation expectations were reduced. They were lower by 9.7 points in early 2022 but since the invasion they are lower by 30.9 points. Post Covid the spending environment was higher by 11.1 points but since the invasion that response has reversed by 9.9 points.

On the plus side of things, financial conditions ahead are 2.0 points higher since the invasion, previously they were 3.5 points higher in early 2022 in the pre-invasion Covid recovery.

The bottom line to all this is that there has been a digging out after the Russian invasion but that post Covid recovery process has now seemingly run out of steam. The forward-looking inflation expectations are still on a slow improving path but that may have stalled. In any event, the turn to more military spending in Europe could make a marked change in Europe’s inflation environment and could alter future surveys considerably.
by:Robert Brusca
|in:Economy in Brief
Germany| Mar 25 2025
Germany’s IFO Shows Recovery
Germany's all sector climate index improved in March to -19.8 from -24 in February. Still, the index only has a 13.9 percentile standing on data back to the early 1990s. The all-sector climate index, the current index and expectations all improve month-to-month with the scope of improvement for the all-sector climate and expectations indexes greater only about 10% of the time. These are sharp month-to-month improvements. However, the levels of the indexes are so weak that the rankings continue to scrape very low levels. Overall conditions in Germany have hardly changed despite the solid month-to-month improvement concentrated in climate and expectations.

Climate The climate measure shows improvements for the all-sector reading, manufacturing, construction wholesaling, retailing, and services. The highest percentile standing for any sector is for construction at a below-median 41.5 percentile standing. The next highest standing is for retailing at a 24.5 percentile standing, the weakest reading is a standing of 10.3% in manufacturing, and the services sector is at a 13.2 percentile standing, not too much stronger than that.

Transition-Ho! While climate conditions are still in difficult straits, we find that current conditions standings are largely worse than for climate standings; expectations show uneven comparisons. We know there are big changes coming to Europe, particularly for Germany, because of the new shift to more defense spending. This, obviously, will create improvements in the defense sector but should also have broader multiplier effects for the economy, for the manufacturing sector, but also for the economy in general. We also expect these changes to spread across Europe with similar increases in military spending to be introduced in other countries, as the United States is looking for Europe to carry more of its own security burden. We should continue to see improvements in expectations and in climate in the coming months and those improvements should be translated gradually into improved current conditions as well.

Current conditions-Manufacturing and Construction lead Current conditions in the index show improvement across all sectors with minuscule improvements being posted in wholesaling and in retailing in March. The percentile standing for the current indexes in March show the strongest reading in construction; it is the only sector above its median: above its 50th percentile at 61.6%, with retailing close to its 50th percentile mark at 48.2%. The weakest readings are for manufacturing at an 11.9 percentile standing and then services at a 16.9 percentile standing. But manufacturing has the largest month-to-month gain. The overall standing for current conditions is lower still at its 10.7 percentile standing, indicating a confluence of weakness across sectors, a result that has the overall index at a weaker standing than any for individual sector.

Expectations – Manufacturing surges Expectations show broad improvement and for the most part fairly significant improvement across sectors. The headline improvement shows expectations at -16.1 in March compared to -20.5 in February, which leaves the index at a 16.9 percentile standing overall. Expectation standings are weak, however, with the strongest expectation standing in manufacturing at 21.1%, the second strongest for wholesaling at 19.8%; services rank third with the standing of 15.1%. Construction, the sector that has the strongest current and climate standings, has the weakest expectation-standing at the 8.2 percentile mark.
by:Robert Brusca
|in:Economy in Brief
Global| Mar 24 2025
S&P Flash PMIs-Services Worse, Manufacturing Better
S&P flash PMI statistics for March show very little change in the composite which has been plugging along at 51.4 in January, 51.4 in February and now 51.5 in March. These are readings from unweighted averages from the eight reporting countries and the European Monetary Union. The manufacturing composite is crawling its way higher from 49.1 in January to 49.5 in February to 49.9 in March, putting manufacturing nearly to a breakeven reading after a long period of showing sector contraction. Service sector readings monthly log 52.0 in January, 51.9 in February and 51.6 in March, a steady but very minor trend to erosion.

The sequential growth rates on the quarterly average readings that exclude March are performed only on hard data. They show that the composite reading has also been very stable at 51.6 for the 12-month average, 51.3 over 6 months and 51.3 over the most recent hard 3 months’ worth of data. Manufacturing has also been stagnant with a reading of 48.4 for the 12-month average, 48.4 for the six-month average and 48.6 for the three-month average for the period ended in February. Services show the same minor slippage we see in the monthly data from 52.5 over 12 months to 52.2 over 6 months, to 52.0 over the most recent three-months of hard data. These trends show minor improvement in manufacturing and minor deterioration in services. Manufacturing continues to show minor contraction as services continue to show minor expansion. Neither sector performs particularly well and neither sector has any particularly notable trend to it. The diffusion data across countries show a great deal of variation.
by:Robert Brusca
|in:Economy in Brief
France| Mar 21 2025
INSEE Manufacturing and Services Steady-to-Weaker
The INSEE industry climate index settled lower in March at 95.9, down from 97.0 in February. The index is lower than its year-ago value of 102.1 and since 2001 it has been this low or lower only 7.5% of the time. Despite the sense of some stability in manufacturing in the tabular data for the last year, the chart (of data since 2014) and the table’s own presentation of the queue standing reveals manufacturing to be at a relative weak standing in March.

Manufacturing production expectations have a 34.4 percentile standing but did improve slightly from the February reading of -14.8. The recent trend of production weakens on the month to a lower quartile standing at its 23.7 percentile. The personal likely trend, which is the reading for each respondent gives to the prospects for his own industry, ticked higher in March to a 40.5 percentile standing. That is better than the percentile for industry over all but still below the level that marks the historic median – a standing at the 50th percentile.

Orders and demand as well as foreign orders and demand each weakened. They each have standing at or below their respective 20th percentile around the lower one-fifth of all historic readings. In addition, the March reading for orders and demand are substantially weaker than they were a year ago and the slippage has been worse for foreign orders.

In contrast, inventory level show few changes and are similar to their year-ago readings and close to their historic median.

Prices have moved to lower readings in recent months. However, price trends and level readings are higher than they were a year ago. In terms of rankings, the own likely price trend is at a 61.5 percentile standing, above its historic median while the manufacturing price level has a relatively weak 36.1 percentile standing.
by:Robert Brusca
|in:Economy in Brief
Germany| Mar 20 2025
German PPI Inflation Settles Down
German PPI inflation fell by 0.2% in February for the headline series, ‘PPI excluding construction.’ The drop marks a string of declines in German headline PPI inflation. For the PPI excluding energy, inflation rose by 0.1% in February after a 0.1% rise in January and no change in December. This is a clear winning streak for German inflation trends at the producer level.

Inflation results from 12-months to 6-months to 3-months show German headline PPI inflation decelerating steadily and somewhat aggressively from an increase of 0.8% over 12 months to a -0.6% annual rate over six months to a -2.5% annual rate over three months. For the PPI excluding energy, German inflation is up 1.5% over 12 months, which eases to a 0.5% annual rate over six months, and then stabilizes but accelerates slightly at a 0.7% annual rate over three months. The performance and behavior of headline inflation obviously shows a great deal more weakness than in the PPI excluding energy. But both are well-behaved.

Oil price trends Brent oil prices declined by 10% over the previous year and have declined by 8% over the most recent 12 months. Over six months they're falling at a 9% annual rate, but then over the last three months they've been increasing at a 9.5% annual rate. Monthly Brent oil prices fell slightly in December, fell by 3.8% in February, but rose by 6.5% in between, during the month of January. The oscillation in oil prices makes it just a little bit difficult to nail down the impact of oil prices on the inflation numbers, but generally oil has been weak and there has only been a slight amount of pressure from oil recently compared to past trends.

German PPI component trends German PPI components are not seasonally adjusted; they generally show inflation is relatively stable. For consumer prices, the 12-month, 6-month and 3-month pace is just under 3%. For investment goods, inflation is accelerating slightly from 2% over 12 months to a 4.2% annual rate over three months. Intermediate goods display growth rates for inflation that fluctuate between -0.9% at an annual rate over six months to +1.4% at an annual rate over three months. The PPI trends compare to CPI trends that are really quite flat with the headline CPI between 2.5 and 2.2% at an annual rate across horizons and the CPI excluding energy at a pace of expansion between 2.4% and 2.7%.

All-in-all German inflation appears to be contained and at a relatively low level. This should be a report that the European Central Bank is pleased with.
by:Robert Brusca
|in:Economy in Brief
Europe| Mar 19 2025
EMU Inflation Pace Is Lower Y/Y; Still Too High- and Not Clearly Falling or Prone to Fall
EMU inflation overview By category, inflation is not accelerating over shortening periods. The year-over-year chart shows inflation in the EMU is lower and less prone to rise over 12 months than other major monetary centers. But, break it down… to 12-months vs. 6-months…to 6-months vs. 12-months…to 3-months vs. 6-months and EMU inflation goes from accelerating over 12 months (compared to 12-months ago) to accelerating in 38% of categories over 6 months (compared to their 12-month pace) to accelerating in 53.8% of categories over 3 months (compared to their pace over 6-months). The inflation worm is beginning to turn within the EMU and within the one-year time horizon. And we know that what is next is more growth, more price pressure, and more military spending in the EMU because of change in upcoming fiscal policy. So, it is becoming clear that the ECB is not going to get back to its 2% target unless or until it is ready to raise rates again. And NO ONE is saying that yet.

Core trends in EMU- Core inflation shows prices better-behaved than headline inflation and across the four largest EMU nations. Inflation is excessive on core inflation year-on-year in Germany and Spain; over 6 months, in Germany and over 3 months, in both Germany and France. Inflation is accelerating on the core measure for German inflation over 6 months and for French and Spanish inflation over 3 months.

Headline inflation- By comparisons, headline inflation is flaring more but it is less stable, more mercurial, so these trends may not prove to be lasting. Still, headline inflation accelerates over 3 months compared to 6 months in three of four countries and is excessive (above 2%) in three of four of the largest EMU nations. Over 6 months, two of them are showing acceleration and excess inflation at the same time.

Commodity level trends across EMU- By commodity category or economic grouping, inflation is prone to accelerate as we note in the first paragraph. Contrarily, the monthly data show decelerating pressures while the sequential 12-, 6-, and 3-month data show a tendency to more acceleration. On monthly data, inflation accelerates in 12 categories in December, in 6 categories in January and in 4 categories in February.
by:Robert Brusca
|in:Economy in Brief