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

Germany| Oct 11 2023
German Inflation Marks Progress to a Lower (Still Too-Hot) Pace
German inflation was zero in September as measured by the HICP. The core measure of the HICP fell by 0.2% month-to-month. These tallies compare to a headline gain in the German domestic CPI definition of 0.3% month-to-month and a CPI ex-energy that rose by 0.2%, also in September.

Sequential patterns The sequential patterns in German inflation differ for the HICP measure and the German CPI measure. The headline shows a 4.4% gain over 12 months, reduced to 3.4% at an annual rate over six months, then picking up to 3.9% at an annual rate over three months. The headline CPI pattern is not that different, with a 4.5% gain over 12 months, a 2.8% annual rate gain over six months, moving up to a 3.8% annual rate gain over three months. For core inflation, the HICP measure shows a steady deceleration from a gain of 5.4% over 12 months to a pace of 3% over six months, down to 2.3% at an annual rate over three months. The German CPI excluding energy posts a 4.8% gain over 12 months, reduced to a 2.5% annual rate over six months, but then creeping up to a 2.8% annual rate over three months. These two measures of the core inflation show steady deceleration for the HICP, while the domestic CPI excluding energy shows inflation moving to a lower range but not steadily decelerating.

Inflation breadth sequentially Diffusion measures the breadth of inflation. These diffusion metrics are formally constructed as half of the number of categories with unchanged inflation on the period and the full proportion of categories with inflation rising period-to-period. If inflation accelerates in half the categories and decelerates in half, the diffusion reading is 50%; if inflation is unchanged in all categories diffusion is 50%. The 50% mark is construed as inflation-neutral. Diffusion calculated on the domestic categories shows that year-over-year inflation rose more prominently with the diffusion measure of 63.6%; that value emerges by comparing inflation over 12 months with the inflation rate of 12-months ago across categories. Over six months, diffusion drops sharply to 27.3%. This measure compares the six-month inflation rates to the 12-month inflation rates across categories. However, over three months even though the headline and core inflation rates do not tick up by very much on the domestic measure, inflation diffusion comparing three-month inflation rates to six-month inflation rates posts a diffusion metric of 72.7%, indicating inflation accelerating broadly over 70% of the categories.

Inflation breadth monthly The monthly data show a slightly better picture looking at the domestic CPI patterns as the month-to-month changes in inflation in July compared to June post diffusion of only 9.1%; the August to July inflation comparisons show diffusion at 45.5%; the September diffusion measure that compares September inflation across categories to August is only at 27.3%. Inflation on a month-to-month basis looks a lot more calming than the three-month to six-month comparison; the latter shows a sharply higher diffusion metric.

Oil prices spurt However, one of the things to bear in mind is that Brent oil prices have been moving up very sharply over all these periods: over 12 months Brent oil prices measured in euros falls 5.3%; over six months oil price rises at a 37.3% annual rate; over three months oil price rises at a 136.1% annual rate! According to monthly data, the month-to-month gain for Brent oil is 4.1% in July, and moves up to 7.6% in August, and by 10.7% in September. So, the oil prices are moving up and this is going to have an impact particularly on the headline inflation for Germany. The knock-on effects to the core, however, are much less clear cut and there’s a good deal of buffering between the headline and the core impact of Brent oil.

Month-to-month changes in annual/annualized rates For the HICP core, however, the 12-month inflation rate has moved sharply lower to 5.4% from a year-over-year rate of 7% in August, and year-on-years rates of over 7% in June and July as well. The six-month inflation rate breaks lower to 3% in September compared to rates of over 5% in August through May and rates much higher for April and earlier. The three-month inflation rate in September moves to 2.3%, compared to 6.4% in August although it compares to even lower three-month rates in the 3.5% to 5% range from July through May. The HICP headline also broke sharply lower in September with the 12-month pace falling to 4.4% from 6.5% in August. The six-month headline pace fell to 3.4% in September from 4.2% in August while the three-month pace fell to 3.9% in September from 6.9% in August. The September 3-month headline pace is still higher than the three-month pace in May, June, and July.
by:Robert Brusca
|in:Economy in Brief
Germany| Oct 06 2023
German Orders Jump…But from a Pothole
The year-over-year chart of German order growth rates puts in context some of the wild changes in growth rates we've seen month-to-month over the past three months or so. But the chart makes clear that the year-over-year trends haven't changed very much although there's been a great deal of monthly turbulence recently. In June, orders jumped 7.6%. In July, they fell by 11.3%. In August, they rose by 3.9%. On balance, over this period there hasn't been much change in orders, but the monthly turbulence has been tooth-rattling.

Sequential growth rates aren’t particularly telling either, with 12-month growth at -4.4%, the six-month annualized growth rate at -11.3%, and the three-month growth rate stands at -3.1%. All these statistics show that over all the periods orders are declining, but there's no clear trend beyond that. Foreign growth shows some wild swings from -5.1% over 12 months, to -12.5% over six months, then jumping to +6.7% over three months (all annualized). Domestically there is deterioration as the 12-month growth rate of -3.2% gives way to a -9.3% pace over six months which then gives way to -15.4% pace over three months. The domestic picture is worth keeping an eye on.

Sector sales, adjusted for inflation, generally show declining trends and a tendency toward progressive deterioration apart from consumer durables and intermediate goods. For all the manufacturing, sales rise by 0.8% over 12 months, fall 1.9% over six months and then the drop accelerates to -7.2% over 3 months, a clear deteriorating pattern. So while the order patterns are indeterminate except for domestic growth, demand conditions are clearly worsening - the trend for demand shows the clear deterioration.

Industrial confidence for selected large European economies shows negative numbers and a worsening for the recent months apart from Spain and, even that is a minor exception. The averages for industrial confidence measures over 12 months, six months and three months are negative and show deterioration on those timelines.

Quarter-to-date trends are broadly negative with two months of quarterly data now available. For the European industrial data, the table presents instead of quarterly changes the queue percentile standings and here the standings are in the lower 30th percentile for three of the four countries with Spain logging a stronger 41-percentile standing.
by:Robert Brusca
|in:Economy in Brief
France| Oct 05 2023
French IP Extends Its Weak Streak; Output Declines in August
French manufacturing production fell by 0.4% in August, reversing a 0.4% increase in July after falling by 0.9% in June. Manufacturing in France shows a steady string of declines falling by 1.1% over 12 months, falls at a 0.7% annual rate over six months and accelerates that decline to a 9.7% annual rate drop over three months.

Sector trends- The output of consumer goods, however, shows mixed trends. Durable goods output moves in the other direction with consumer durables output up by 4% over 12 months, up at a 13.8% annual rate over six months and rising at a 16.8% annual rate over three months – a clear, strong, accelerating path. On the other hand, however, consumer nondurables output continues the weak streak that we see in the headline, falling by 2.7% over 12 months, falling at a 4.4% annual rate over six months, and falling at a 2.4% annual rate over three months. Capital goods output is declining in August on a month-to-month basis. But it rises by 3.8% over 12 months, accelerates to a 4.2% annual rate over six months, then drops back to gain at only a 2.5% annual rate over three months. Clearly, the sector that's driving negative industrial output overall is intermediate goods where output logs a 5.9% decline over 12 months, a decline at a 4% annual rate over six months and a decline at a 12.8% annual rate over three months.

The quarter-to-date- Data are up to date through August, so the quarter-to-date calculations are for two months into the third quarter. On that basis, output is falling at a 0.1% annual rate, consumer durable goods output is falling at a 1.3% annual rate in the quarter, consumer nondurable goods output is rising at a 1.2% annual rate, capital goods output is rising at a 3.8% annual rate, and intermediate goods production is falling at a 6.4% annual rate. Output trends in the quarter clearly have mixed characteristics; in fact, in the quarter-to-date numbers seem quite different than the trends that we see sequentially over 12-months to six-months to three-months.

Auto registrations- The registration (and, presumably, the purchase) of automobiles fell by 2.5% in August after rising 3.2% in July and falling by 2% in June. Sequentially registrations are mostly weak, falling by 2.8% over 12 months, rising at a 7.4% annual rate over six months, and then falling at a 5.3% annual rate over three months. However, this pattern compared to the second quarter base still generates a 15.1% annual rate gain in the quarter-to-date with two months of data into the third quarter.
by:Robert Brusca
|in:Economy in Brief
Global| Oct 04 2023
OECD LEIs Mostly Creep Higher in September
The OECD 7 and U.S. LEIs each gained 0.1% in September. Europe’s Big 4 and Japan were both flat. Asia’s Major 5 gained 0.1% in September. Progressive annualized growth rates calculated for these countries/regions from the normalized indicators show gathering strength for the OECD 7, Japan, and the United States. Asia’s Major 5 are on the cusp of progressive acceleration and should probably not be excluded on a technicality because their 3-month and 6-month growth rates are so much stronger than other regions even if the 3-month pace is a tick slower than the 6-month pace. And, only Japan and Asia’s Major 5 have queue standings of their LEI levels (top panel) that are above their historic medians (above a rank of 50%). The OECD 7, Europe’s Big 4 and the U.S. all are in or at the border of their bottom third rankings on the amplitude-adjusted level assessment.

Gaining traction... Recalibrating the ranking for growth rates of LEI measures, rather than ranking on levels, shows a 91.4 percentile rank standing for China, a 74.7 percentile ranking for the U.S., a 68.2 percentile standing for OECD 7, and a 64.7 percentile standing for Japan. Only Europe’s Big-4 grouping is below its median value. These are ranked on six-month growth for data back to mid-1999. All the six-month averages are gaining and the changes over six months on LEI levels also show gains across the board. The OECD prefers to assess its LEIs over six-month periods. On that basis, the LEIs are broadly GAINING TRACTION.

Amplitude adjusted assessments- The third panel of the table shows ratios to trend for the LEIs on an amplitude-adjusted basis. Only the U.K., Japan, and China are consistently above 100 indicating above normal expansion. The LEI level standing shows above median performance for the U.K., Japan, Germany, France, and China.
by:Robert Brusca
|in:Economy in Brief
Global| Oct 03 2023
Manufacturing PMIs Are Split in September, But Mostly Weaken
Momentum: In September, 10 of 18 manufacturing PMI observations across countries and areas listed in the table deteriorated. Over three months, half of the observations deteriorated compared to their values over six months. Over six months, 8 of 18 diffusion metrics-slightly less than half- deteriorated compared to their value over 12 months. However, over 12 months, only four observations improved leaving 14 in the deteriorating mode. Conditions are still considerably mixed between improvement and deterioration, but they are clearly tilted toward more deterioration than toward more improvement, indicating that globally manufacturing continues to be under pressure.

Sequential comparisons of expansions vs. contraction: As to actual expansion or contraction on the PMI gauge, 14 of 18 show contraction in September while 12 show contraction in August and 14 show contraction in July. The preponderant result shows contraction, meaning PMI values are below 50. Looking at broader comparisons, over three months 13 of 18 reporters have values showing contraction, over six months 12 of 18 show contraction and over 12 months 11 of 18 are indicating contraction.

Assessment favors WEAKNESS: While the statistics about improvement versus deterioration are somewhat more mixed, it's clear that for most countries whether they are improving or deteriorating slightly they are nonetheless still in the contraction zone as far as the manufacturing sector is concerned. The global manufacturing economy remains under pressure.

The strongest: Only Mexico, Russia, Indonesia, and India register manufacturing PMI values above 50 over all three horizons of three months, six months, and 12 months. In the case of Russia, I would say that statistic is suspect, but it's the one that's reported and having the alternative it's the one that I use.

The weakest: Germany is the only country with readings over three months, six months, and 12 months that all are below a diffusion value of 45.

Broader, five-year rankings- The queue percentile standings for this group of countries are extremely weak; the median reading, in fact, is 26.9%. The median sits barely above the lower quartile which is an extremely weak position. Russia has the strongest percentile standing at 98.1% but probably only if you're willing to suspend disbelief. After that, the highest reading is India's 82.7%, Indonesia's 73.1%, and Mexico's 69.2% China has a 59.6 percentile standing in September. However, among the largest industrialized countries, the readings are the weakest. The euro area has a standing in its 7.7 percentile, which includes Germany at a 7.7 percentile standing, and France at a 5.8 percentile standing. The U.S. has a 25-percentile standing. The U.K. has a 5.8 percentile standing - the same as Canada. Large economies have extremely weak readings for the most part. China is the exception as the only large economy with a standing above its 50th percentile.

Relativity... And while I like the standings data because it accounts for structural historic differences, it's also true that relativity in some cases is not the bets metric. This high standing for China, for example, refers to a manufacturing PMI value of 50.2 which places it barely in expanding territory. Since we have been in a prolonged period of impacted growth, when rankings over the last five years we are comparing everything to a period in which most of the readings have been extremely low except for a few relatively strong observations that occurred when countries temporarily broke out strongly from the Covid lockdowns.
by:Robert Brusca
|in:Economy in Brief
Japan| Sep 29 2023
Japan’s Industrial Production Is Mixed in August
Industrial production in Japan in August rose by 0.2% after falling by 1.6% in July. Manufacturing output in August fell by 0.2% after falling by 2.4% in July. Overall industrial production has made a gain while manufacturing production is pulling back slightly.

Sequential growth rates from 12-months to six-months to three-months show lessening weakness culminating in a small positive growth rate over three months for total industry output. Overall industrial production falls at a 3.4% annual rate over 12 months, falls at a 1.1% annual rate over six months, and then makes a 6% annual rate positive gain over three months. Manufacturing follows suit. Its sequential rebound shows output falling by 3.8% over 12 months, falling at a 2.7% annual rate over six months, then advancing at an 8.5% annual rate over three months. While the monthly data are somewhat chaotic, both overall and manufacturing industrial production are showing accelerating sequential growth.

The sequential acceleration is borne out by the chart at the top of this report; however, it's part of a still very flat growth process where we can see that three-month, six-month, and 12-month growth rates for industrial output have been in a narrow range and have been somewhat arbitrarily changing places for a relatively long period of time. The chart traces data back to September 2022 and on this timeline no clear pattern of acceleration over any sustained period can be identified.

The paradox here is that quarter-to-date all industry and sector as well as aggregate measures are showing a decline in output, two months into the third quarter. The sequential growth rates, on the other hand, give us some sense of an acceleration in progress. These two measures conflict with one another.

The manufacturing industries, textiles, and transportation, show sequential growth rates that are getting progressively weaker from 12-months to six-months to three-months. These are contrary to the trends for manufacturing overall.

By sector, consumer goods output is up by 1.3% over 12 months and gains at a 2% rate over six-months but then drops at a 13.2% annual rate over three months – it is decelerating. Intermediate goods show the progressive acceleration that we see in the headline as output falls by 2.6% over 12 months, falls by 0.4% at an annual rate over six months, and then advances by 4.4% at an annual rate over three months. Investment goods show an unclear sequential pattern falling by 11.1% over 12 months, reducing that drop to -4.7% annualized over six months, but then having an accelerated drop at a -20.1% rate over three months.

Mining shows a pattern that looks close to progressive weakness, with an 8.6% decline over 12 months, a similar 7.6% decline over six months, followed by an accelerated 17.3% annual rate fall over three months.

Not surprisingly electric & gas utilities output shows persistent strength with output rising 2.2% over 12 months, advancing at a 9.5% pace over six months, and rising at a a 24.9% pace over three months. Utilities output simply feeds current activity and demand and there is less ability to stockpile output from the sector.
by:Robert Brusca
|in:Economy in Brief
Europe| Sep 28 2023
EC Commission Indexes for EMU Slide Lower Again
The European Commission indexes of overall confidence and sector assessments for September slipped lower and the European Monetary Union (EMU) with the overall gauge dropping to 93.3 from 93.6 in August. At that level, the overall index has a ranking among historical observations back to 1990 in its lower 24th percentile, an extremely weak reading.

Component or sector readings for EMU The component readings for the index show slippage or unchanged values for all components except the industrial sector where there was a month-to-month improvement in September to -9 from a -10 reading in August. The service sector assessment was unchanged in September at a level of 4.0. The retail and construction indexes each slipped to a reading of -6 in September from a reading of -5 in August. Consumer confidence in the EMU fell to -17.8 in September from -16 in August; it has the lowest component ranking among the five components at a 14.1 percentile standing in September. Confidence in the EMU is doing very badly. The industrial and services assessments also have standings below their 50th percentiles. Retailing and construction have percentile standings above their historic medians (which means they're above the 50th percentile). Construction has a relatively firm standing at a 70th percentile standing; retailing has a 58.7 percentile queue standing.

Country level performance in September 18 of 19 members report country level confidence readings for September; 8 of 19 members show month-to-month declines, the same number as in August and one more than July. Among the largest countries (Germany, France, Italy, and Spain), Italy and Spain showed declines in September while Germany, France, and Italy showed declines in August. Germany and France showed declines in July as well. The large countries have consistently been showing weakness. Because the overall European monetary union gauge is weighted for economic size, this weakness among the largest economies weighs on the overall index.

Standings show broad and intense weakness The monetary union gauge itself has a 24.2 queue percentile standing; this compares to a 15.9 percentile standing in Germany, the largest economy in the EMU. France, the second largest economy, has a standing at its 37.5 percentile. Italy, the third largest economy, logs a 41.1 percentile standing. Spain, the fourth largest economy, has a 39.5 percentile standing. Among the remaining 14 countries, only three have queue percentile standings above their 50% mark. Those are Malta with a 99.6 percentile standing, Greece with the 71.5 percentile standing, and Cyprus with a 62.7 percentile standing. Most countries large or small have overall sentiment standings below their 50th percentile and generally substantially below their 50th percentiles. Among the largest four economies, the highest percentile standing is from Italy with a 41.1 percentile standing; among the other 14 in the table, setting aside the three that have readings above the 50% mark, the highest percentile standing is 39.2% in Lithuania, followed by 33.6% in Slovakia, 29% in Latvia, and 28.5% in Luxembourg.
by:Robert Brusca
|in:Economy in Brief
Global| Sep 27 2023
EMU Money and Credit Decline Broadly in August; Globally Money Growth Remains Weak and Largely Contracts
Monthly money and credit developments in July hinted at a possible reversal in the ongoing global declines in money and credit trends one month ago. However, in August the data for money and credit in the European Monetary Union (EMU), as well as money supply data from the U.S. and the U.K., show that the declines in money on the month are back in force. Only Japan shows an increase in money supply in August and that's not surprising since Japan has a legacy of positive money growth rates unlike other major monetary centers in this table.

EMU conditions Nominal growth- The European Monetary Union shows negative money supply growth in both July and August as well as over 12 months, six months, and three months. Money supply trends are flat with growth declining mostly at about a 2% pace or a little more over the three-, six-, and 12-month intervals. Credit growth in the EMU remains weak and registers tiny growth rates over 12 months compared to negative growth rates of about -1% over both three- and six-month horizons for overall credit and private credit.

Real growth- Inflation-adjusted growth rates for credit and money in the EMU show a table full of negative numbers. The steepest negative growth rate is over 12 months at minus 7% for M2, that gives way to -5.7% over six months and then steps back up to minus 6.8% over three months. So, we're not able to say that the decline in real balances is tapering off in the monetary union. Credit to residents has its steepest sequential growth rate over three months at -5.9%, compared to -4.9% over 12 months. Private credit posts nearly identical growth numbers to total credit as well as nearly identical trends. Money and credit in the EMU, looked at sequentially, looked at in nominal terms or looked at in real terms, show significant ongoing weakness and possibly stepped-up weakening.
by:Robert Brusca
|in:Economy in Brief
Europe| Sep 26 2023
Early Read on EMU PPI Suggests Growing Pressure
Price trends in the early reporting European Monetary Union countries show a mixed bag of results for the PPI. In August, we have six countries listed in the table of which five are monetary union members. Only two show PPI declines in August. Germany shows a decline of 0.1% and Denmark, a member of the economic union, not of the monetary union, shows a decline of 1.1%. In August, the consumer price index core HICP gains 0.3%, building on a 0.5% gain from July. The early inflation data from the monetary union suggest that the pace of the inflation decline is shifting and slowing.

Tail wind becomes head wind- Some of this pressure undoubtedly stems from Brent oil prices that rose by 6.1% in August and by 6.3% in July, both are month-to-month gains. Brent oil prices are up at a 56.8% annual rate over three months and a 3.5% annual rate over six months, compared to dropping by 12.7% year-over-year. Energy prices are no longer a tailwind for falling inflation in the monetary union.

Hints on core inflation- While the consumer price core measure shows increases in each of the last two months, for Germany at least, the ex-energy PPI gauge shows a 0.3% decline in August and a 0.4% decline in July. The German PPI excluding energy is showing a faster deceleration as it rises 1.4% year-over-year, falls at a 2.3% annual rate over six months and then falls at a 3.3% annual rate over three months.

Oil impacts the PPI and CPI- Inflation trends are somewhat confused and complicated, which is not surprising after having seen such a burst of inflation and then an unwinding of oil prices. Now, as oil prices begin to firm and rise, we're going to see an upside to headline inflation; it's unclear exactly how core inflation is going to navigate in this environment. We would expect core producer price inflation to be somewhat more sensitive to price pressures from oil and consumer prices to be less sensitive to energy pressures. But when we look at some, admittedly limited, core readings, what we're seeing in August for Germany are core prices ex energy continuing to fall while the HICP for the EMU, excluding tobacco food & energy, is rising, and slightly accelerating over three months compared to six-months.

Inflation trends- Central banks tend to focus on year-over-year inflation rates and for the monetary union we're looking at PPI prices that are declining sharply over this group of countries although for Germany the core ex-energy is up by 1.4% and, of course, the ECB is looking at consumer prices union-wide. There we see the core is up at a 5.3% annual rate, decelerating only to a 4.8% annual rate over six months and then ticking back up to a 4.9% annual rate over three months. Oil prices are wreaking havoc with these trends. Producer prices generate massive declines in inflation over 12 months and over six months; then, there are scattered results over three months as oil prices begin to turn and as the lags apparently work through different countries at different speeds. Over three months PPI prices are falling at a double-digit rate (or at least nearly so) in Germany, Denmark, and Ireland. Over three months producer prices are rising at a 3.3% annual rate in Finland, at a 6.3% annual rate in Spain, and at a 7.7% annual rate in Portugal.
by:Robert Brusca
|in:Economy in Brief
Germany| Sep 25 2023
German IFO Remains Extremely Weak
IFO survey remains quite weak: The IFO survey of the German economy in September continues to generate extremely weak readings. The all-sector climate reading in September edges slightly stronger to -20.2 from -20.4 in August. At that level, the all-sector climate index ranks in the bottom 7.8% of all observations on data back to December 1991. Ranking the al-sector metric from February 2022, when Russia invaded Ukraine, the ranking is in the lower 5% of all readings since then. Climate is unambiguously weak. And it has essentially no momentum or negative momentum.

Climate readings are weak The climate readings in September for manufacturing, construction, wholesaling, retailing, and services are little-changed. There's a small improvement in construction month-to-month, a small improvement in wholesaling, and a very small improvement in manufacturing. The other metrics worsened slightly. The strongest queue standing among any of the sectors for climate in September is for construction at a 29.6 percentile standing, followed by retailing at a 25.4 percentile standing; the weakest reading is for manufacturing at a 5.6 percentile standing and services at a 6.3 percentile standing.

Current readings are weak Current conditions in September generate a positive reading of 2.0, but that slips from 2.7 in August. The September reading has a 13.8 percentile standing on data from December 1991 and it is the weakest reading since Ukraine was invaded by Russia in February 2022. Current conditions in September improved slightly in manufacturing, while deteriorating, and all other sectors. The services sector posts a net positive reading at +9.2 in September, but that's weaker than the +12.2 reading in August. Queue standings for the sectors show the strongest reading is for construction at the 54th percentile and at retailing at about its 54th percentile as well; the weakest current reading is from services with a 14.7 percentile standing, with manufacturing and wholesaling having standings in their 30th percentiles, respectively. Of the five sectors, three of them have the weakest readings since Ukraine was invaded by Russia; manufacturing is an exception with a bottom 5 percentile standing and retailing with a bottom 10 percentile standing. Despite being ‘exceptions’ these all are very weak readings.

Expectations have abysmally weak rankings Expectations show rankings that show weaker rankings than their current rankings for every sector up and down the line with the all-sector ranking at the 6.2 percentile mark; and no sector has a reading higher than a 7.1 percentile standing. However, month-to-month there are some hints of improvement with the all-sector index improving to -26.2 in September from -26.6 in August. Wholesaling, retailing, and services all make small improvements month-to-month as manufacturing and construction show essentially unchanged or weaker readings month-to-month. One difference in the expectations column is that the ranked standings since the invasion occurred are stronger than for the current readings, although this doesn't amount to much because the global rankings are still even weaker. But compared to values over the period since the invasion occurred, the ranking for wholesaling in September has a 50th percentile standing and retailing has a 65th percentile standing. The all-sector index has a 30-percentile standing with the weakest reading from manufacturing at a 15-percentile standing. Nonetheless, it's hard to characterize any of this as good news. It’s just not vying for a ranking as the worst news.
by:Robert Brusca
|in:Economy in Brief
Europe| Sep 22 2023
EMU PMIs ‘Stabilize’ at Weak Levels
The S&P flash PMIs for the composite manufacturing and services sectors for the September readings show a stronger Germany, leading to a stronger reading in the European Monetary Union in the composite. Meanwhile, France, the United Kingdom, Japan, and the United States, all report weaker composite readings for September.

Composites are broadly weaker- Germany’s strengthening is in the composite as well as for manufacturing and services separately. This helps to push the services sector in the EMU to a stronger reading although the EMU manufacturing reading is weaker month-to-month. France shows weaker readings in the composite as well as for both manufacturing and services. Japan follows suit on that score. The U.S. and the U.K. each report a weaker composite driven by a weaker service sector that dominates a somewhat stronger manufacturing sector in both the U.S and in the U.K.

Only two composites show net expansion underway- Only the U.S. and Japan have composite PMI readings above 50 in September, indicating expansion. And the only sector readings with PMI values above 50 are for services in the U.S. and in Japan, as well.

Sequential trends- The sequential readings from 12-months to 6-months to 3-months show weakening for the composite and for both sectors in the EMU, in Germany, in France, in the United Kingdom, and in Japan. The exception is the U.S. that is stronger on balance over 3 months for the composite and for the services sector. Comparing the 6-month PMI averages to the 12-month averages, conditions are broadly stronger across sectors and the composites. The exception is France that weakens on all three metrics. The U.S. and Japan strengthen on all three metrics, while the U.K. Germany, and the EMU strengthen on their services measures which dominate the composite, making it stronger over 6 months compared to 12 months. Comparing the 12-month readings to 12-months ago, everything is weaker except for services and the composite in Japan.

Evaluation of PMI levels- The queue percentile standings rarely change much month-to-month and across these metrics we continue to see queue standings well below their neutral, 50% mark, generally below the 20% mark for most countries, across most sectors, with the sole exception being Japan that has the service sector reading at its 81st percentile; that helps the composite to a 75.5 percentile standing. However, despite month-to-month changes and broader trends in the sequential numbers, it's clear that the PMI values being posted are extremely weak.

Net 3-month changes- The final column of the table shows the net changes over 3 months; over three months these are overpoweringly weak. They're negative numbers for all the countries and all the sectors with the sole exception of manufacturing in the United States. The last 3 months have been weak.

On balance: The bottom line for the S&P flash numbers for September is that weak conditions continue to prevail and to dominate. There is some rebound in Germany that helps the European Monetary Union to post an uneven rebound, but the levels of activity indicated by the composite, the manufacturing sector and the services sector continue to be extremely weak.
by:Robert Brusca
|in:Economy in Brief
France| Sep 21 2023
French INSEE Survey: Mixed Picture; Manufacturing Improves While Services Remain Dead Flat
Manufacturing and Services The INSEE surveys for France in September rose for manufacturing while it remained dead flat for services. The manufacturing survey rebounded to 98.6 in September but was still below its July value of 100.7. The manufacturing rebound in September is limited; activity remains weak, historically at a percentile standing of 31.3% in the bottom third of historic observations.

Manufacturing Climate and production- Manufacturing production expectations in September remained negative but improved to -6.2 from -9.0 in August. The recent production trend worsened, falling to -6.3 from -4.0 in August. However, respondents referring to their own industry reflected a ‘personal likely trend’ that's much stronger at 14.1 compared to 2.5 in August. Survey respondents are downbeat on manufacturing overall, but upbeat on their individual sectors. That's a divergence worth watching. And it's also a rather significant divergence because the standing for the recent industry trend is at its lower 15th percentile whereas the standing for the ‘personal likely trend’ is at its 77.7 percentile. There's an extreme chasm between what respondents think is going to happen to industry overall compared to their optimism on their own individual surveys. Is it optimism or denial? Those two readings on ‘likely trends’ compare to an overall manufacturing production expectation that has a 39.7 percentile standing. That standing is below its 50th percentile, below its median, and weak.

Orders and demand- Orders and demand are little-changed month-to-month in manufacturing. The September value is -21.4 compared to -21.2 in August. For foreign orders & demand, there is slight improvement to a reading of -13.9 in September from -15.1 in August. The percentile standing for overall orders & demand is a 32.8 percentile standing and that compares to a 44th percentile standing for foreign orders & demand; both are below median values, and both are weak.

Inventories- The response for inventory levels declined slightly in September to 14.8 from 17.8 in August, but these are strong values with 87-percentile standing for the September value.

Prices- Prices show increased pressure month-to-month with the ‘own likely price trend’ moving up to 5.2 in September from 2.2 in August compared to the manufacturing overall price trend that moves up to 8.9 from 5.0 in August. The ‘own likely price trend’ in September is still below its July value, whereas the manufacturing price level in September is assessed at twice its July level. The standing for the ‘own likely price trend’ is a 55.9 percentile standing, compared to a below-median 46.2 percentile standing for the manufacturing price level. While the assessment of manufacturing prices is below the assessment for the ‘own unlikely price trend’ the two standings aren't all that far apart.
by:Robert Brusca
|in:Economy in Brief