Economy in Brief: 2023

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.

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.