Economy in Brief: 2023

Industrial production in Japan fell by 1.3% in November after rising by 2.2% in October. Japan's production profile, however, shows an acceleration is in progress. Over 12 months production falls by 1.2%, over 6 months output is rising at a 3.7% annual rate, and over 3 months it's rising at an even stronger, at a 4.3% annual rate.

Manufacturing: The manufacturing sector echoes the results in the trends of the headline. Manufacturing IP is close to showing acceleration in progress but for a technical shortfall. Manufacturing output falls by 1.3% over 12 months, then it accelerates at a strong 5.6% annual rate, although there's a slight set-back to trend as the 3-month growth rate recedes to 5.2%; the 3-month and 6-month growth rates are nearly identical and much stronger than the year-over-year growth rate. Technically I can't say that this is ongoing acceleration, but it's certainly a strong picture for manufacturing output.

Product Group Performance: Product group results in Japan in November show widespread declines with a decline of 2.2% in consumer goods output, a decline of 0.1% in intermediate goods output, and a decline of 2.2% in investment goods output. All of these are changes, and are, for the most part, reversals, from the output that the sectors reported in October as consumer goods output expanded by over 5%, intermediate goods output expanded by 1.4%, and investment goods output was flat.

Sequential Growth trends by Sector: Checking the sector results for sequential trends and acceleration, we find: • Acceleration in intermediate goods where output falls by 0.9% over 12 months, rises 5% at an annual rate over 6 months, and accelerates to a 5.6% annual rate over 3 months. • Consumer goods show a tendency toward acceleration but do not show a clear unwavering acceleration path. Consumer goods output is up by 1.8% over 12 months; it then recedes, falling at a 4.7% annual rate over 6 months, but it follows that with a surge, growing at a 15.7% annual rate over 3 months. Consumer goods output has a hiccup in between its 12-month and 3-month rates of growth- with that decline over 6 months. • Paradoxically, investment goods are closer to showing ongoing deceleration. Output falls by 5.3% over 12 months, and then falls at a 15.7% annual rate over 6 months. Investment goods trim their loss over 3 months to an 11.4% annual rate of decline, but that's still a decline in double digits. Having double digit declines over 3 months and 6 months definitely is a buzzkill in terms of evaluating trends for Japanese industrial output.

Other Industry: Looking separately at other components of overall industrial production in November, there are increases in mining and in electric and gas utilities output on the order of growth rates of 2 to 2 1/2 percent. In each case, there are reversals of declines in output posted in October. Sequentially, mining output is recovering strongly with output falling 1% over 12 months, rising at a 2.2% annual rate over 6 months, then exploding for a 27.4% annual rate gain over 3 months. Utilities output is more questionable, falling by 0.2% over 12 months, rising over 6 months at only a 0.2% pace, and then falling at a substantial 16.8% annual rate over 3 months. It's hard to understand why electric and gas output falls so strongly over 3 months when other categories of output are all rising solidly or strongly over 3 months; industry clearly needs utilities output to advance. It's very possible that there's some sort of weather effect operating that has retarded the usage of utilities over the last 3 months. It's hard to take utilities out of the context of the report and treat it as something that is authentically weak or worrisome.

Quarter-to-date: In the quarter-to-date, overall output is expanding at a 7.5% annual rate with manufacturing up at 8.2% annual rate. These are data with two-months’ worth of observations in place calculating the two-month average gain over the third quarter base. Sector results for quarter-to-date data show strong gains in consumer goods, as well as intermediate goods and in mining. But there's a significantly strong decline in output in investment goods and an extreme decline in utilities output in the quarter-to-date.

Consumer confidence in Finland fell to -13.3 in December from -12.4 in November. The confidence metric stands in the 2.9 percentile of its historic queue of values. It also stands at its 12-month low, its lowest mark of the year. One year ago, the consumer confidence measure stood at its lowest point on data back to January 2001. While the overall ranking for consumer confidence is improved in 2023 compared to a year-ago, the reading is still low, and momentum is poor.

The assessment of Finland's ‘economy now’ improved slightly to -41.4 in December from -42.5 in November. That's above its 12-month low of -50.3. The progression of averages from 12-month to 6-month to 3-month, doesn't show much ongoing improvement in this metric.

Expectations for Finland's economy in 12 months also improved in December to -16.8 from -19.1 in November. However, the progression of averages from 12-month to 6-month to 3-month does not show improvement in train; it shows deterioration.

Consumer price inflation over the past year improved slightly in December to 4.1 from 4.2 and there has been steady improvement on the inflation front as the year has gone by.

Unemployment in Finland has been steady over the last three months although it deteriorated slightly in December at -31.7 compared to -31.3 in November. The moving averages also show that there has been a gradual deterioration from 12-month to 6-month to 3-month. The personal threat of unemployment ‘now’ shows a sharply weaker number at -14.2 in December compared to -11.5 in November, and the threat of personal employment has been declining as well from 12-month to 6-month to 3-month.

The economic environment shows the favorability of the time to purchase durables deteriorated slightly in December at -25.7 compared to -23.7 in November. The 12-month, to 6-month, to 3-month progression of averages shows a slight ongoing improvement on this metric.

The favorability of time for saving worsened slightly at -13.6 in December compared to -13.4 in November. There has been little movement in this metric, but it has gradually worsened.

The favorability of time for raising a loan balance deteriorated slightly month-to-month and the 12-month, to 6-month, to 3-month sequence shows slight change in this measure.

The household financial situation deteriorated in December, falling to a 16.4 rating from 21.9 in November. The 12-month, to 6-month, to 3-month averages of this metric have been worsening.

Household possibilities to save over the next 12 months were worse in December compared to November. This metric has been sliding from 12-month, to 6-month, to 3-month.

Ranking perspectives The queue percentile rankings show consumer confidence overall at a 2.9 percentile standing, which is quite weak although a slight improvement from what it was a year ago. The economy ‘now’ and the economy in 12 months, both have standings in their 15th to 20th percentiles, up from what they were a year ago, but still clearly quite weak. The assessment of consumer prices shows an improvement in inflation that is down to its 87.7 percentile from its 97.7 percentile one year ago. Unemployment in Finland shows a standing at its 17.8 percentile while the personal threat of unemployment is at its 14.3 percentile; both are sharply lower than what they were a year ago when the standings were in their 40th percentiles, respectively.

The environmental standings showed the favorability of a time to purchase durables has only a 4.7 percentile standing although that's better than it was a year ago. The favorability of time for saving has a 2.2 percentile standing, above what it was a year ago when it was on its all-time low on data back to 2001.

The favorability of the time for raising a loan balance fell to an all-time low in December 2023. Households rate the possibility to save over the next 12 months at a 0.7 percentile standing, extremely weak, and far below what it was one year ago.

Spain’s headline industrial PPI price index for all industries fell by 1.1% in November after falling by 0.8% in October. The PPI is showing ongoing deceleration similar to the performance of the PPIs from most developed economies.

Spain's headline PPI falls by 7.3% year-over-year, rises at a 1.2% annual rate over six months, and then falls at a 3.7% pace over three months. Consumer goods prices rise by 7.3% over 12 months, slow to a 6.1% pace over six months, and then accelerate gaining at a 14.6%, annual rate over three months. Intermediate goods prices fall by 5.4% year-over-year, fall at a 1.3% annual rate over six months, and then rise at a 2.1% annual rate over three months. Investment goods prices rise by 2.5% over 12 months, rise at a 1.4% annual rate over six months, and then accelerate to a 3.1% annual rate over three months. All the annualized three-month changes are stronger than their counterpart 12-month changes.

The headline change for total industry in Spain shows more weakness than in the components for manufacturing categories alone in the table detail. Consumer goods prices in the manufacturing sector are up strongly over three months compared to both their six-month and year-over-year gains. Intermediate goods demonstrate steady acceleration as their tendency to fall over 12 months and six months gives way to a rise over three months. Investment goods prices show steady expansion but no acceleration although the 3-month gain is the strongest gain over the usual sequence comparing 12-months, to 6-months, to 3-months.

On balance, Spain is experiencing sequential price pressures despite posting two months of declines and the headline industrial price index. The manufacturing sector seems to have more pressure than the more comprehensive industrial sector experiences.

And while the sequence of gains over 12 months, six months, and three months, seems quite tame for the overall industrial PPI in Spain, if we look at the trends for each of those horizons separately, the conclusion changes. Spain has a flattening trend for its industrial PPI with the declines in prices year-over-year having slowed down, begun to flatten out, and show lesser as well as diminishing declines. Over six months, the percent change profile shows clear acceleration after falling at close to a 20% pace for some periods; the six-month percent change now shows persistent small increases. The three-month percent change in May was falling at a rate in excess of a 20% pace; in recent months, the three-month percent change has been increasing although this month it dipped back into negative territory, showing a net decline over three months. Yet, it had risen over three months over each of the preceding three-month periods ended in August, September and October. The underlying trends for Spain’s producer prices are not as beneficial as the headline may suggest and this observation gives some weight to the notion that the rate of change of producer prices may be slowing or coming to an end.