Introducing

Robert Brusca

Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.

Publications by Robert Brusca

France| Jul 11 2025
French Inflation Moves Up But Stays Low
French inflation jumped in June, rising by 0.4% in the month on the HICP metric, the same as the monthly rise for France’s CPI and its CPI excluding energy. Not surprisingly the monthly diffusion reading tracks the breadth of inflation rise monthly to 72.7% in June affirming that the breadth of the gain in monthly inflation was substantial. Breadth is sharply higher in June after looking very weak at 18.2% in May. But the month of May followed a broad acceleration with breadth at 90.9% in April. Monthly breadth reading can be quite unstable. Diffusion values above 50% revel inflation acceleration period a period in which inflation acceleration is more common than deceleration.

However, breadth over the sequential periods 3-months, 6-months and 12-months shows inflation acceleration is creeping up as the breadth reading advances on the timeline from 36.4% over 12 months, to 54.5% over 6 months, and to 63.6% over 3 months.

France has been an inflation success story and a growth failure story. The HICP headline inflation last higher than 2% in August 2024 and the domestic CPI excluding energy was over 2% for its 12-month gain in March of 2024. And while the HICP has signs of ongoing slowing, the domestic CPI excluding energy has been relatively stable since September 2024. The CPI excluding energy inflation is running at a weak and well contained pace of 1.6% over 12 months and the weakening HICP undoubtedly has benefited from the ongoing drop in energy prices where Brent costs in euro-terms show an 18.5% drop over 12 months.

The headline HICP for France shows a mixed trend from 12-months to 6-months to 3-months. The domestic CPI is closer to showing steady acceleration. The CPI excluding energy shows persistent acceleration. But the domestic CPI gauge also shows inflation at a pace of just 2.2% over 6 months and 2.6% over 3 months compared to a low 12-month pace of 1.6%. The acceleration in French inflation is mild and the pace of inflation is really controlled.
by:Robert Brusca
|in:Economy in Brief
Germany| Jul 10 2025
German Inflation Settles Lower
Germany is HICP inflation measure (12-month) came in at 2% in June, below its May reading 2.1% but above its April reading of 1.9%. There have been a few recent readings for Germany at 2% or below and these are the first traces of 2% inflation in Germany since mid-2021 when inflation first began to climb above the 2% target that is the objective by the ECB for all of the European Monetary Union.

Inflation progress is evident The German domestic CPI is also up by 2% year-over-year, and this is the fifth time that it has posted an increase of 2% or less since August 2024. This is good news because it suggests that German inflation isn't just flirting but perhaps trending and will eventually stabilize around the 2% mark. However, Germany also still has work to do because the domestic CPI gauge excluding energy in June is still at 2.5% year-over-year; that pace dropped from 2.8% in May and it's generally been higher over the past year with some fluctuations up as high as a 3.1% year-over-year pace, as was the case in December. But it's also been as low as 2.6% in August of last year. Core inflation in Germany remains stubborn. We see that clearly from its domestic CPI excluding energy reading. The core reading in the HICP series is not yet available for June but the core reading from May came in at 2.9%, an acceleration from 2.8% in April.

Sequential inflation The sequential inflation readings in this report are quite good for domestic inflation, and even for the ex-energy reading, but not quite as good for the HICP which is the measure of inflation used by the European Central Bank. German HICP inflation is 2% over 12 months, drops to 0.9% over 6 months, and then the annualized rate rises to 2.2%, again, over 3 months. For the domestic measure of inflation, the annualized CPI rates are 2% over 12 months, 1.5% over 6 months and 1% over 3 months - a clear decelerating pattern. That decelerating pattern is echoed for the domestic CPI excluding energy which is at 2.5% over 12 months, 1.7%. over 6 months and 1.3% over 3 months.

Inflation Diffusion -monthly Inflation diffusion, which calculates the breadth of inflation for the domestic CPI, shows diffusion of 27.3% for June, 54.5% for May, and 18.2% for April. The June and April readings clearly point toward more decelerating than accelerating inflation as they are below the neutral 50% mark. The May report suggests just slightly more acceleration than deceleration at 54.5%.

Sequential Diffusion Sequentially, diffusion over 12 months, 6 months and 3 months gives us readings below 50% on each horizon which is good because that points to inflation decelerating rather than accelerating. However, the diffusion readings are consistently rising from 18.2% over 12 months, to 27.3% over 6 months, to 45.5% over 3 months – and moving more toward diffusion neutrality.

Weak oil has been a tailwind for lower inflation Inflation progress has been helped along by weak oil prices in June. Brent oil prices measured in euros rose by 6.7%; they had fallen by 4.1% in May and by 10.7% in April. These are month-to-month calculations. Sequentially, Brent oil prices fell by 20.7% over 12 months, they fell at a 23.4% annual rate over 6 months, and they're falling at a 30% annual rate over 3 months. All of these metrics should have helped the inflation numbers to look more contained. When inflation falls over a relatively long period of time, it also has a chance to permeate non-energy measures and cause even non-energy inflation to edge a little bit lower. For now, weakness in oil prices has been a tailwind for German inflation progress.
by:Robert Brusca
|in:Economy in Brief
Japan| Jul 08 2025
Japan’s Economy Watchers Reading Is Increasingly Narrow Range
The current and future economy watchers indexes advanced in June. In the current index, only services, housing, and employment readings weakened. In the future index, the reading for corporations weakened based on weakness for nonmanufacturing corporations. However, the improvement signaled is still quite downbeat since it only indicates that the ongoing deterioration is slower. The diffusion readings continue to be below 50, indicating pullbacks across all categories are still in train and are only letting up slightly.

While the improvements in the month-to-month readings were widespread, they were mostly small and no reading in either the current or the future survey has a diffusion value above 50%. That means that all these economy watcher readings are actually showing deterioration although on the month the rate of deterioration slowed across most category readings. In fact, there are no month-to-month readings at or above 50 in either the current or future survey in the last three months. To get a category reading of 50 or higher, we must go back to February when the reading for future employment was 50. We go back to August 2024 to find a majority of future sector reading at 50 or higher and to March 2024 to get a majority of current readings above 50.

The far-right hand column assesses the level of the June diffusion readings vs. past readings back to 2002. On that 23-year timeline, all the current and future readings have percentile standings below the 50% mark leaving all of them below their respective median readings for the period.

In the current survey, retailing and nonmanufacturers with diffusion percentile standings in their respective 41st percentiles have the strongest queue readings. The weakest reading in the current survey are the 21st percentile standings for housing and for employment.

For the future survey percentile readings, the strongest is a 45.5 percentile standing for eating and drinking places. The weakest future reading is the 24.5 percentile reading for employment.

Seeing such weakness in the current and future indexes in employment a reading that is a lynchpin for all sectors is clearly not reassuring.

At the bottom of the table, there are collected results for monthly data on month-to-month changes on the breadth of improvement. We see monthly that after a poor performance in April with most reporting categories worsening, May and June show most of them improving month-to-month on the order of 70% to 100%. Similar metrics for three-month and six-month changes perform much worse. These calculations are executed on changes in averages the twelve-month and average six-month and average 3-month data. On those comparisons, we see average diffusion is up broadly over 12 months compared to 12-months earlier. But the averages over six months and over three months are showing declines across all categories.

While the monthly data are showing some month-to-month improvement, the broader data show that the pace of improvement linked to broad averages is still not in place. And it is still a nefarious since of ‘improvement’ for the overall readings in which the diffusion data are only signaling that the categories are getting worse at a slower pace. Japan continues to struggle with weakness as the Bank of Japan wrestles with inflation and the United States and Japan spar over tariffs.
by:Robert Brusca
|in:Economy in Brief
Germany| Jul 07 2025
German IP Is Making Progress Across Most Sectors
German industrial production rose by a sharp 1.2% in May but only after a 1.6% plunge in April which followed a 2.3% surge in March. This has been an unusually turbulent period for industrial production. However, on balance, German IP shows acceleration (from 12-months to 6-months to 3-months) for headline IP, for consumer goods output, for capital goods output, as well as for manufacturing overall and for real manufacturing orders.

Data trends This collected pattern of accelerating trends is exceptionally good news and tends to push the volatility in output into the background. Typically, volatility tends to reduce the meaning of any trend since depending on where you are in a volatility, up-vs-down pattern, the trend will be not just exaggerated but even switched in direction. However, with not just growth but acceleration in play and with accelerating trends in play for so many categories- including real orders- the uptrend appears to be solidly established even in the face of volatility. And the chart seems to confirm that (drawn on year-over-year sector trends).

Knowledge beyond data In addition, we know that there are other conditions stirring in Europe that give us cause to think that output solidifying is a real event not just the luck of the draw on one month’s volatility. The shift is to get NATO countries to pay for more of their own defense and to pay more period. At the recent NATO meeting, member countries pledged to spend 5% of GDP on defense that should help to light a fire of demand across Europe. At the same time, the good news is that inflation headlines in the EMU and across major member countries are mostly on target while core inflation remains stubborn at an elevated pace near 2.5%, mostly across the EMU.

Quarter-to-date (QTD) The volatility leaves German IP growing at less than a 1% annual rate in Q2 over the Q1 average (quarter-to-date, or QTD)– a far less portent reading than the three-month rate of 7.7% (saar). But manufacturing, unimpeded by the weakness in construction, shows a QTD annual rate rise of 2.9%. Real manufacturing orders are advancing at a 16.4% annual rate in the quarter while real sales are declining.

Surveys show improvements over three months compared to six-months, but all of them also show some slippage over six months compared to 12-months. Yet, all of the three-month averages are above the 12-month averages. Survey data generally show momentum is turning higher, but not markedly.

Queue standings – longer term comparisons The queue standing data compare current growth rates (Y/Y) or (in the case of surveys) levels to past performance. Total IP, consumer goods, capital goods, manufacturing output, and real orders all have May readings above their historic median growth rates/or levels (rankings over 50%). But construction and intermediate goods sectors lag badly. Real sales are weak, and the surveys all show weak signal compared to all levels since January 2000. This tells us that the momentum in German industry (12-month growth) is solid and strong, but that the level of activity is weak – and quite weak- compared to past performance. This is also clear from the far-right column that measures current output relative to output in January 2020, just before Covid. These are aggregate changes. Germany’s output is still 1.7% lower in May 2025 than it was in January 2020 – nearly five- and one-half years down the road. This has been a very weak period for Germany. Only capital goods output among sectors is higher, rising by 4.9% over a period of five-plus years and making most of that in the last 12 months. The surveys show conditions have weakened on balance over this period as well.

Some other Europe Portugal and Norway give us a look at two other European economies. Both show growth in May as well as QTD. Norway is supercharged with the strong oil market in play as a tailwind. Its queue standing for growth has a 99-percentile reading. Both Portugal and Norway are stronger relative to January 2020; Portugal by 11.8% and Norway by 8.3%.
by:Robert Brusca
|in:Economy in Brief
Global| Jul 02 2025
Unemployment Rates Remain Low, Stable
The EU unemployment rate fell to within a tick of its all-time low in April at 5.9% and stayed there in May. In the European Monetary Union (EMU), the unemployment rate in April fell from 6.4% in March to 6.2% in April, its all-time low; then in May it ticked up to 6.3%. This can hardly be construed as a weakening of the European labor market.

At the same time, the EMU HICP has registered 2% growth year-over-year in June. In May it was at 1.9% with the core up at a 2.4% rise year-over-year. In June, Italian and Spanish core readings are 2.1% and 2.2%, respectively. In Germany, ex-energy inflation is at 2.5%. The core for the EMU is not yet available but clearly inflation, broadly considered, is very close to touching all the bases the ECB wants it to touch. And at the same time, Europe’s rate of unemployment is at or near all-time lows at least since the EMU was formed. That looks almost like policy nirvana.

The Monetary Union is experiencing low inflation rates even for those countries (largely Mediterranean countries) that had stubbornly high inflation rates in the past. Interestingly, those formerly high-inflation countries have substantially reduced their rates of unemployment. In the U.S., it was the long low, extra-low, inflation span after the Great recession that brought the inflation rate down slowly but eventually to 50–60-year lows. The U.S. rate got to 3.5% under Trump and briefly to 3.4% under Biden. Now with similar inflation progress -and for the EMU, there is a long train of progress not looking just since Covid but looking at the collective progress since the EMU was formed.

Among the 12 EMU members listed in the table, only three Luxembourg, Finland, and Austria have unemployment rates above their median rate compared to data since 1994. Spain’s unemployment rate is still in double digits at 10.8% but is much lower than it used to be. The Greek unemployment rate is at 7.9%; Portugal’s is at 6.3%. Spain’s unemployment rate is in the 15th percentile of its ordered queue of rates; the Greek rate has been lower only 3% of the time; in Portugal, the current rate has been lower less than 20% of the time. Low inflation and low unemployment go hand in hand. But when they diverge, the solution is not to coddle unemployment. It is to backdown inflation to allow the economy to move forward thereafter and prosper with lower inflation and lower unemployment in the future. I don’t think this lesson has been broadly enough learned, but looking at Europe and the U.S. the lesson simply presents itself with exceptional clarity.
by:Robert Brusca
|in:Economy in Brief
Global| Jul 01 2025
Global Manufacturing PMIs Mixed Story in June
The global manufacturing PMIs from S&P are largely mixed in June with 9 of the 18 surveyed economies showing manufacturing improvement and 9 showing deterioration. However, there's relatively more improvement shown among the large economies with the euro area, Germany, the United States, the United Kingdom, and Japan also showing improvement in the manufacturing sector in June.

Median manufacturing readings moved down slightly month to month in June; the sequential readings from 12-months to six-months to three-months still show slight slippages in train.

Diffusion readings measure a breadth of improvement from period to period. These readings show a 61.1% breadth over 12 months compared to a year ago; over six months compared to 12-months the breadth slips sharply to about 27%; over three months compared to six-months breadth improves to about 39%; however, that's still below 50% which is the neutral reading. Clearly on balance more are slipping that are improving.

There are some sequential trends clearly showing that conditions are still touch and go and still not improving although the counterpoint to that is that year-over-year, the six-month to 12-month, and the three-month to six-month changes show consistent improvement for the United States, France, Germany, the euro area and that on that comparison India is also doing better at each venue.

The pooled data are not particularly impressive or encouraging. However, it's clear that there are some centers of strength and of firmness and enough to be somewhat encouraging because the large economies do tend to lead the way and right now, they are the stronger group of economies.

Readings in terms of strength show that, on the whole period, back to January 2021, the euro area, Germany, France, and the U.S. all have standings in their June readings that are above their medians; for that period Japan also has a standing above its median. India has a standing in its 90th percentile, an extremely strong reading. The large economies, and at least one of the large developing economies, are having some success.

The percentile standings, however, drive home a message that the median ranking among reporting countries for this period is in its 32nd percentile, close to the one third mark and nowhere near the median for its historic queue of data - and that's not encouraging.

Polled together on unweighted data, the U.S., the U.K., the European Monetary Union, Canada, and Japan have a queue standing on the period in only its 45th percentile. The BRIC countries are only in their 40th percentile. The average among Asian countries is only in its 37th percentile.
by:Robert Brusca
|in:Economy in Brief
Global| Jun 30 2025
Globally Money Growth Stabilizes Except in Japan
Globally money growth has stabilized more in the month of May.

In the European Monetary Union (EMU) over three months the annualized money growth rate ticked up to 2.9%, compared with 2.5% growth rate over six months and a 3.6% growth rate over 12 months; over two and three years the growth rate for money in EMU has been 2% for two years and 1.4% for three years. Compared to that, we have money growth sustaining itself at a stronger level.

In the United States, money growth continues to accelerate but slightly; the three-month growth rate for money is 6.2%; at an annual rate over six months it's 4.9%; over 12 months its pace is 4.5%. Money growth has steadily accelerated compared to a 0.4% growth over 3 years and a 2.7% pace over 2 years. The U.S. is the one exception where money growth rates are looking hot and where there has been steady acceleration in these growth rate; these calculations are in terms of M2.

The United Kingdom shows more variability as 12-month growth in U.K. for the money aggregate M4 is 3.5%. That moves up to 4.1% over 6 months and is back down to 1.7% annualized over 3 months. So, the 3-month growth rate in the U.K. is looking more like the 1.8% growth rate over 2 years, but even that stepped up from 1.1% over 3 years. In the case of the U.K., money growth rates have picked up and do seem to have steadied and they are off their top growth pace. However, at 1.7% the nominal growth rate of money over three months is on the light side

Japan, of course, is the central bank that is still engaged in raising rates and still has an acknowledged inflation problem. In Japan, the 3-month growth rate for M2 plus CDs is -1.3% annualized, weaker than 0.1% over 6 months which is weaker than 0.6% over 12 months; the Japanese money growth rates also decelerate from three-years to two-years and continue to decelerate on down to three-months. The Bank of Japan is still plotting its strategy for an inflation rate that appears to be both stubborn and slightly excessive. However, it's a welcome set of problems compared to the deflation that Japan dealt with the decade earlier.

Real money balances Real money balances tend to show some step up in pace. In the case of the European Monetary Union, there's a steady acceleration of money growth from -2% at an annual rate over three years to +2.3% over 3 months and more or less steady pickups from period to period in between.

In the U.S., real money growth rates show a persistence acceleration from -2.8% at an annual rate over three years to the 5.2% annual rate over three months. Real money supply growth in the U.S. is cooking and strong, particularly over three months. However, over six months the growth rate is only 2.2% so the heat in terms of U.S. money supply growth is a relatively recent phenomenon.

In the U.K., real M4 growth continues to show contraction and M4 growth contracts over all horizons; over three years, two years 12 months, six months and three-months. However, the three-month contraction is at a -1.6% rate, deeper contraction than the 12-month rate (-0.4%) and pretty close to what it's done over two years on balance (-1.5%) although that's a step up in the pace of contraction compared to 12-months to six-months. U.K. growth has been running on the weak side in addition to its weak real and nominal money supply growth.

Japan shows contraction and money supply overall horizons and the contraction gets progressively larger over more recent periods; money growth is at a -4.1% annual rate over three months and that compares to -2.8% over 12 months, logging a declining rate of -1.4% at an annual rate over three years. Japan’s weak real money growth is a policy decision.

The background for real and nominal money growth is that oil prices are continuing to fall. They're falling in nominal terms and in real terms with year-over-year oil prices falling at about a 23% annual rate and in real terms the oil price is falling at about a 25% annual rate. The weakness in oil is helping central banks catch up on their inflation mandates at least four headline inflation.

EU credit growth is lax And the European Monetary Union credit growth continues to expand but it is slowing. Private credit grows 2.4% at an annual rate over 12 months, but that slips to 1.5% annualized over three months and compares to the kind of growth that Europe had been seeing over two and three years where the growth rates averaged 1.4% and 1.7%. Real credit growth in the monetary union shows that there has been a pickup in the growth rates from 12 months to six months to three months; all show expansion although there's not steady acceleration there is steady positive growth. Those are good developments for the outlook for growth.
by:Robert Brusca
|in:Economy in Brief
Europe| Jun 27 2025
EMU Sentiment Indicators from EU Commission Show Easing
The EU Commission indexes for June 2025 shows erosion in the overall index to a level of 94 compared to 94.8 in May. The readings for France have become particularly weak in the last two months. As shown in the chart, it is apparent that the reading for France has fallen quite sharply during this period. France has posted index declines of 3.7% in consecutive months; these are quite large declines. The cumulative two-month drop for France has been larger less than 5% of the time back to 2015; Romania and Denmark (EU Member) also has experienced relatively sharp drops in the last two months. While Portugal and Belgium have experienced top 5% to 7% increases in the last two months. Germany has generally improved although it backed off in the current month. The euro area reading has been in a state of minor erosion; Italy is currently in a several month phase of having bounced back from a period of weakness. All-in-all it has not been a particularly good period for the European monetary union or in its large economies with the exception of Germany.

Sector performance The five sector or environmental readings that we have for the Monetary Union show erosion on the month for three of five of the readings. Improving month-to-month is the services sector which moved to a reading of +3 in June from +2 in May. The construction sector moved to a reading of -3 in June from -4 in May; however, eroding is the reading for retailing that fell to -8 from -7 in May; consumer confidence edged lower to -15.3 from -15.1 in May; and the industrial sector reading fell to -12 from -10 in May. The improvement is in the cyclical and small employment sector of construction but also in the major employment sector of services. Meanwhile the all-important manufacturing or industrial sector has eroded on the month and this is the sector we are focused on - and concerned about - particularly with tariffs in flux.

Rankings or standings by industry As of June, the overall European monetary union index has a 23.5 percentile standing on data since about 1990 while the industrial sector standing is in its 16th percentile, consumer confidence in its 18th percentile, and services standing in their 24th percentile. Retailing has a 46.4 percentile standing that moves it up closer to its median for the period (median readings on ranked data occur at a ranking of 50%). So, retailing is getting closer to a median performance while construction is above its median with a standing in its 77.5 percentile.
by:Robert Brusca
|in:Economy in Brief
France| Jun 25 2025
French Household Confidence Remains Weak
French household confidence ticked higher to 88.4 in June from 88.3 in May, retaining most of the drop from April to May.

June confidence has a 24.8 percentile ranking near the upper border of its bottom 25 percentile on a ranked basis. The standings are coded nearly uniformly in red, indicating bad economic results. While price diffusion below 50 is good news, weak prices like that also suggest ongoing weak economic activity. For most the survey indicates a standing below the 50th percentile that implies a reading below its median on this timeline back to 2001. Unemployment has a high 81 percentile standing and is coded read because a high standing for unemployment is bad news.

The favorability to save is strong. The standings had coded black. But often when the favorability and ability to save is high, it is because the spending environment is poor, and it is true here with the spending environment with a 26.5 percentile standing.

Living standards for the next 12 months have an extremely low 6.5 percentile standing.

Two columns to the right chronical changes in the survey value over two periods for Covid and to the invasion of Ukraine and then from the date of Ukraine’s invasion to the current observation. Among the increases in readings since Ukraine’s invasion is a sharp increase in expectation of unemployment and an increase in the favorability to save.

Not only is confidence net lower since the invasion but inflation assessments are lower as well.

The favorability to spend has increased since Covid struck but then after Ukraine was invaded the favorability to spend fell, unwinding most of its recovery since Covid struck.

On balance, the INSEE survey remains weak and French consumers are troubled. There had been some recovery in train, through mid-2024. But since then, the recovery has eroded as the chart at the top of this report shows.

However, perhaps the quick end to the Middle East war and the prospect of less risk to oil markets can help restore confidence. Ukraine’s war with Russia is still in progress. But with the Middle East war stalled- at least for a while, perhaps attention can be shifted to Ukraine with a meaningful positive impact.
by:Robert Brusca
|in:Economy in Brief
Germany| Jun 24 2025
Germany’s IFO Improves
The IFO shows reading that are stronger this month and are showing legacy of being in an upswing – the current index, the climate reading and expectations- all are swinging higher.

Despite the clear turn revealed in the chart, the rankings of the climate, current, and expectations readings remain extremely weak. Among the 18 readings for five sectors and a headline on each of three measures only three of these readings – three of eighteen- have standings as of June at or above their historic median (above a ranking of 50%) back to March 1993.

The climate measure shows a ranking in its 21st percentile in June. That corresponds to a reading of -15.3 in June, an improvement from -16.0 in May. Climate readings improved across all sectors in June except retailing where the climate reading backtracked to -20.3 from -18.6. In terms of the sector percentile standings, only construction has a reading above its median- above a standing at its 50th percentile.

For current conditions, the June measure improved to -3.5 from -3.9 in May. The current ranking is still a weak 13.4 percentile standing. In the current index, the manufacturing and retailing sectors each took a step back in June. Services and wholesaling improved month-to-month. Construction was unchanged in the month. The current readings are much more mixed than for the other two environmental responses in climate and expectations. However, current conditions rank at an extremely weak level of 13.4%. The percentile standings are above the 50% level in construction and in retailing.

Expectations stepped up, improving month-to-month to -9.9 in June from -13.3 in May. Improves swept across sectors only leaving out improvement in retailing where conditions owed to -28.1 in June from -25.1 in May. The service sector reading improves sharply with expectations rising to -3.6 from -10.9. However, all readings under expectations are below their respective historic medians. The strongest reading is 39.2% in construction with the weakest being a 14.7 percentile reading in retailing.

The second ranking column, to the far right, re-ranks all the sectors in the various environments since the Russian invasion of Ukraine. That even took an economy that has been recovering from Covid and took readings down to fresh lows. Looking at valued on that short horizon, expectations have rarely been higher; all expectations are in their respective 90th percentile standing except retailing only in its 80.5 percentile- all of these are strong on this reduced timeline. The climate reading is at its 58.5 percentile overall on this short post invasion timeline with all readings except manufacturing having readings above their 50th percentile. However, the current reading while largely stronger than the full period rankings for ‘current’ really are not that different and note that the current conditions continue to be quite weak even over the shorter horizon.

The bottom line seems to be that expectations are turning higher and the climate has improved but the current situation is changing only slowly. This is a case in which ‘survey type data’ seem to be showing or hinting at improvement in train to a greater extent that current data which should be best reflect in traditional ‘hard data’ reports would lag. It is a cause for optimism.
by:Robert Brusca
|in:Economy in Brief
Global| Jun 23 2025
Flash PMIs Are Mixed
PMI data show broad improvement month-to-month with the manufacturing readings improving in all reporting units except Australia and France.

Service sectors weakened in France, India, and the United States in June.

Only the US and France showed a lower composite index reading in June than in May.

The unweighted composite average of this reporting group of eight shows a steady improvement in the composite from April to May to June. The manufacturing PMI improved from April to May and then held there in June. The average service sector reading improved steadily from April to May to June.

The sequential patterns from 12-months to 6-months to 3- months on hard historic data show that over three months the composite indexes were weaker monthly in four reporting units. Four manufacturing readings were weaker over three months than they were over six months. And six service sectors were weaker over three months compared to six-months.

Over six months six service sector measures weakened compared to their 12-month values. This helped five composite indexes to weaken on the same timeline. Six manufacturing sectors’ gauges improved over six months compared to 12-months.

Compared to 12-months ago, the 12-month average for this month improved for all manufacturing sectors. Three service sectors weakened compared to their averages of 12-months earlier and two composite indicators- in the United Kingdom and in Japan were weaker over 12 months on average than for their average of 12-months ago.

Germany and the EMU show steady improvement in their respective composites over 12 months and for 6-months compared to 12-months and 3-months compared to 6-months. Their manufacturing sectors also were improved on this timeline as was the manufacturing sector in Australia.

No service sector was sequentially stronger in these periods, but the U.K. service sector did get sequentially weaker over 12 months, 6 months, and 3 months.

India and Australia have sector ranking data above their respective medians (ranks of over 50%) for all three sector queue rankings. Japan and Germany each have two sectors ranked above 50%: manufacturing and the composite.

The unweighted average PMI reading from 12-months to 6-months to 3-months shows a relatively flat and stable set of PMI readings while manufacturing PMI readings are improving. But the services readings show a slight deflation in their sequential progression. However, services readings for all horizons show growth, manufacturing shows slight contraction, and composite indexes show modest continuing expansion.
by:Robert Brusca
|in:Economy in Brief
Japan| Jun 20 2025
Japan’s May Inflation Pressure; Inflation Makes a Second Run at Acceleration
Japan’s inflation measures excluding fresh food are showing significant pressure as the ‘all items ex fresh food’ metric soared at a 5.6% annual rate over 3 months while the measure excluding fresh food & energy rose at 3.7% pace over 3 months. The two gauges also rose by 3.7% and 3.3%, respectively, over a span of 12 months. The performance of the measure excluding fresh food & energy sequentially is plotted in the chart. It shows clear ongoing inflation pressure and acceleration.

This, of course, puts the Bank of Japan in a difficult position. Midyear elections are in prospect and sharp rise in rates could prove politically intrusive. At the same time, Japan’s largest trading partner, China, is struggling and its second largest trading parting, the United States, is embroiled in negotiations with Japan over tariffs. There is a great deal of uncertainty for Japan right now surrounding the policy process and that includes a large dose of geopolitical issues.

At the same time, there has been a kerfuffle in Japan’s bond market in the super-long end as purchaser demand has proved less solid and less stable than it was. The BOJ has had a scheduled taper of its purchases in place, one that the BOJ at its last meeting agreed to reduce in order to retain better demand in the long end of the JGB market. However, Japan does face some uncertain times for policy.

The inflation metrics with fresh food show the strongest growth rates for inflation. A traditional core measure that subtracts all food and energy shows less pressure at only 1.5% over 12 months, compared to core readings of 3.3% and 3.7% for the core measures that subtract out fresh food.

Looking across components, among the eight major categories only two have inflation easing over 12 months compared to 12-months ago; those two are ‘education’ where inflation is - and prices- are falling sharply, and ‘reading and recreation’ where inflation is at 2.9% but lower than it was 12-months ago. Over 6 months, only two of five categories show inflation acceleration (compared to the 12-month pace) and the 3-month annualized inflation across categories shows acceleration in half and deceleration in half compared to the paces over 6 months. Only education shows sequential deceleration – where the fall off is sharp. Only housing shows sequential acceleration, and the ramp up there is more moderate.

QTD (quarter-to-date) Quarter-to-data inflation (May & April over the Q1 average then compounded) shows a headline pace at 2%; ‘all items ex fresh food’ inflation is at a 4.7% pace; ‘all items ex fresh food & energy’ is at 3.3%, while the traditional core ‘excluding all food & energy’ is at 1.4%. So, again, we see on the QTD horizon the measures with fresh food subtracted – the BOJ’s preferred gauges- are showing the most pressure. By component, QTD pressure is lodged in ‘reading & recreation’ and in ‘transportation & communication;’ and ‘housing’ (without subtractions) flies below the 2% target at 1.8%.
by:Robert Brusca
|in:Economy in Brief