Economy in Brief

Japan's economy watchers index improved in April to 54.6 from 53.3 in March. March had improved to 53.3 from 52.0. The index has been increasing steadily over 12 months. It is higher by 5.1 points over 12 months, by 3.8 points over 6 months and by 6.1 points over 3 months. A lot of improvement has come in the last few months.

In April, all the diffusion readings in the economy watchers current index are above 50, indicating expansion for the category, with two exceptions: housing and manufacturers. Housing has a 46.1 diffusion reading and has been below 50 for several months running. The manufacturing index has been vacillating, but the April value of 49.6 shows only a very slight contraction in progress in manufacturing.

To evaluate these diffusion indexes by seeing where they stand relative to historic data, refer to the queue standing column at the far-right hand portion of the table. Among the ten entries under the current index, six have queue percentile standing in the top 10% of values since April 2002. All readings stand above the 50th percentile signaling that all are above their historic medians for this period. Among the headline and the nine components, the headline and seven components show increases on all horizons: over 12 months, over 6 months and over 3 months.

The future readings for the economy watchers index also show steady increases with the 55.7 diffusion index in April, better than its 54.1 diffusion reading in March which exceeds the 50.8 reading for February. The future headline also shows gains over all three horizons: over 3 months, over 6 months and over 12 months. Like the current index, all the percentile queue standings for the future index are above the 50th percentile mark - all categories are above their historic medians. In addition, the headline and six components have standings in their top ten percentile.

The raw diffusion readings for April in the future index show only housing below 50 in its diffusion value. And like with the current index, housing has a string of sub-50 diffusion readings. However, its queue standing remains above its 50th percentile on data back to 2002.

Not only is the current assessment quite upbeat but so is the outlook assessment from the future index.

Industrial output in Europe continues to be challenged in March. The median percentage change for the early reporting European Monetary Union members shows a drop of 1.1% following a gain of 1% in February and a drop of 1.7% in January. There are still net declines over three months, over six months, and over 12 months for the median, based on the grouping of countries in the table.

Of the 14 European economies listed in the table, 11 of them show month-to-month declines in industrial production in March. That is very substantial breadth. The countries showing increases in March are Luxembourg, Spain, and Finland. Among the rest of the countries, industrial production declines show small drops only in Norway and Italy where IP sheds just of 0.4% month-to-month; all the rest of the declines are month-to-month declines of one full percentage point or more (nine in all).

The median calculation shows a steady pace of decline over three months, six months, and 12 months at annual rates. The decline over 12 months is 1.2%; the decline over three and six months, in both cases, is at -1.3%. Over three months, six of the 12 European monetary union economies are showing declines in industrial production; eight of them show declines over six months and seven show declines over 12 months. The breadth underlines that output trends remain consistent across each of these spans.

For the quarter-to-date, which is for the first quarter, since March data complete the quarterly results, a decline in the median of -0.4% is indicated. There are declines in six of the reporting European Monetary Union economies in the first quarter (QTD).

The manufacturing PMI for the entire European Monetary Union shows month-to-month declines in March and February although it shows a net rise over three months juxtaposed against net declines over six months and 12 months.

The French trade deficit contracted to 9.95bln euros in March from 11.37bln euros in February.

French exports show more resilience than imports, but they have a complicated trend in play. Exports rise by 9.5% over 12 months, fall at a 6.5% annual rate over 6 months and edge up at a 0.7% annual rate over 3 months. This semi-weakening profile is still considerably stronger than for imports.

Import trends are simply decelerating progressively. Imports fall by 2.4% over 12 months. They fall at a faster, 29.4% annual rate over 6 months, and then they fall at an even faster 36.7% annualized rate over 3 months. The import picture in France is much more worrisome than for exports, but there also are special issues there.

As for components, exports show a consistent but not uniform pattern of the various flows advancing over 12 months, contracting over 6 months then rebounding over 3 months. The ‘other’ category is the exception to this set of trends.

Imports show a consistent withering trend overall that is echoed by two of the three components as ‘food’ and the ‘other’ categories show steady deceleration. Transportation equipment imports decelerate sharply from 12-months to 6-months then reduce their rate of contraction over 3 months. The sector is still weakening but not at progressively faster rates of change.