Economy in Brief

The European monetary union showed weakness in April; the overall index fell to 95.6 this month from 96.2 in March. The April reading of 95.6 is slightly above the February level of 95.4 but still below the January reading of 96.0. Over these last four months, the index has vacillated and has a narrow range but has eroded more often than it has improved across sectors, and it is still locked in an eroding trend.

The component indexes of the industrial sector, retailing, construction, and services, as well as consumer confidence, generally showed weakness month-to-month or stability in April. Services and construction were unchanged in April from their March levels demonstration stability. Retailing fell by one point, posting a - 7 reading in April from -6 in March. The industrial sector slipped to -11 in April from -9 in March; these sectors exhibited weakness. The exception was consumer confidence, and that wasn't much of an exception, as it rose to -14.7 in April from -14.9 in March. However, it has been gradually improving from January to February through March and April. From mid-2022 onward, consumer confidence, despite its clear deep negative readings, has been engaged in a process of ongoing improvement.

Of the 17 countries in the monetary union that report to this survey in a timely fashion, seven of them showed declines in their overall indexes in April, compared to March. March was a month of relative strength with only four countries weakening relative to February. However, February had been the opposite, with weakness prevalent across monetary union members. In February, only six showed improvement compared to the month before – and each of the four largest economies showed deterioration.

The queue percentile standings rank the countries and the sectors on data back to January 2020. The monetary union has a 31.7 percentile standing on that timeline, leaving it in the lower third of all observations reported during that span. Retailing and construction have queue percentile standings above the 50th percentile which marks them as above their median estimates over this period. The industrial sector is the relative weakness with the 22.4 percentile standing, followed by consumer confidence with a 24.7 percentile standing. The services sector is climbing with a 45.9 percentile standing closing in on its median value over the past four years.

Across member countries, only three have percentile standings above their historic medians for this period. They are Cyprus, Greece, and Spain. They're hardly bellwethers for the community and all Mediterranean countries. Among the largest four economies, especially Germany, the largest economy in the monetary union, weakness prevails. Germany has a 20.7 percentile standing, 36.8% for France, 44.1% for Italy, and 56.4% in Spain. The largest EMU economies are not very strong on a relative scale (queue standings).

Among the rest of EMU members, Estonia has the weakest standing at 6.7%, Finland at 10.3%, Austria at 17.4%, Belgium at 23.2%, and five others clustered in the 30-percentile range. For all EMU members large and small, the percentile standing averages 37.3%, a bit higher than the ranking for the EMU which is a size-weighted measure.

Money growth still contracting; credit growth is flat EMU Money Growth- Money and credit growth in the European Monetary System has ground to a halt with M2 money supply still decelerating in nominal terms. Three-year growth is at 2.6% at an annual rate, two-year growth at a 0.5% annual rate, and growth over three months is flat. When viewed in real terms, there's a little more progress that appears but the growth rates for real money supply are negative. Over three years European Monetary Union money grows at a rate of -2.7%; over two years it is weaker at a -3.8% annual rate; over 12 months real money supply declines at a 2.5% annual rate. Over three months, real money supply has declined at a 1.3% annual rate, reversing the step-down in contraction. There's a gradual and somewhat uneven movement toward money growth contraction to be less restrictive; however, negative real money growth rates persist and when it comes to nominal money growth the performance is simply flat.

EMU Credit Growth- Credit growth in the monetary union faces similar trends. Private credit grows at 2.7% at an annual rate over three years, at a 1.9% annual rate over two years, but private credit growth over three months has only a 0.2% annual rate of growth. Nominal private credit growth has slowed its pace so much that over three months its pace has been close to zero. Looking at private credit growth in real terms, we see it shrinks at a 2.7% annual rate over three years; it shrinks at a 2.5% annual rate over two years, that's further reduced to a -2% annual rate over 12 months. Over three months, the annual rate for credit growth is further reduced to -1.1%. The degree of contraction for credit in the European Monetary Union has been reduced; however, the EMU continues to demonstrate weak nominal credit growth and declining inflation adjusted credit growth.