- Deepening in goods trade deficit after December’s widening.
- Exports rise 2.0% m/m vs. a 3.8% December drop, led by a 10.9% rebound in exports of consumer goods ex-autos.
- Imports, up in all end-use categories, jump 11.9%, the largest m/m increase since July ’20 to a record level, led by a record 32.7% surge in imports of industrial supplies & materials.
Europe| Feb 28 2025EMU Member Inflation Still Mixed and High
French inflation trends alone among the largest four EMU economies is showing a break lower. Twelve-month inflation across the EMU is however quite mixed with Germany and Spain knocking on the door of 3% inflation while France is below 1% and Italy is below 2%.
And the divergences diverge further from there...
German inflation rises from 2.8% over 12 months to a 3.3% pace over six months to 4.1% over three months – a classic ongoing acceleration. Spain’s 12-month pace of 2.9% also steps up to 4.5% annualized over six months then explodes to 5.7% over three months. The accelerations are not good for central bank trying to hit a 2% inflation goal.
But the accelerations are counterbalanced by some moderation and even weakness. French inflation decelerates steadily, and prices actually decline over six months and three months. For Italy, the 12-month pace of 1.7%, steps back to 1.3% over six months, then rises back to a 3% annual rate over three months.
Even so, the best news is from Italy and Spain on the measure of core inflation. Each of them reports a steady menu of inflation rates over 12 months, six months, and three months below 2% and decelerating. This is notable because both Italy and Spain have badly behaving headline inflation trends.
However, energy prices are moving up, too, over the last three months as well as sequentially.
While inflation is still far from well-behaved, it may still be slowing. Signs of conforming Italian and Spanish core results are the most encouraging news. Still, over the past five years, inflation has averaged 3.2% in France and 4.4% in Germany, with Italy and Spain seeing inflation at the 3.7% to 3.8% mark. Core inflation over five years, however, has been lower and closer to the 2% goal at 2.5% in France, 2.8% in Italy, 3.2% in Spain, and 3.6% in Germany. Still, it’s not there but it is closer.
Global| Feb 27 2025Charts of the Week: No Free Lunch
The global economy remains fragile, with financial markets showing resilience despite persistent policy uncertainties, geopolitical risks, and uneven growth. Investors have largely adopted a wait-and-see approach, balancing inflationary pressures and rising US trade protectionism against looser monetary policy and optimism about AI-driven productivity gains. This week’s charts highlight the growing complexities in global trade and economic policy, where traditional tools, such as tariffs, could be increasingly misaligned with economic realities. Recent US survey data, for instance, indicate a sharp rise in inflation expectations, likely fuelled by concerns over tariffs, which have simultaneously weighed on consumer confidence (chart 1). Meanwhile, latest US trade figures reveal a record deficit in goods trade alongside a widening surplus in services trade, further emphasizing why tariffs alone are unlikely to correct trade imbalances (chart 2). At the same time, shifts in US trade policy have coincided with near-record highs in global economic policy uncertainty. By dampening business and consumer confidence, this could weaken US export demand, complicating the intended effects of trade restrictions. Another dynamic is unfolding in Europe, where geopolitical tensions are prompting governments to increase defence spending, introducing yet another layer of uncertainty into the macroeconomic outlook (chart 4). In short, downside risks to global growth are mounting. Sector-specific and country-level risk indicators, such as those provided by our data partner Dun and Bradstreet, and which capture these underlying pressures, will certainly be useful for monitoring broader economic risks in the months ahead (charts 5 and 6).
by:Andrew Cates
|in:Economy in Brief
USA| Feb 27 2025U.S. Pending Home Sales Decline Sharply in January
- Sales decline to record low.
- Home sales fall across much of country.
by:Tom Moeller
|in:Economy in Brief
USA| Feb 27 2025U.S. GDP Growth Slowdown Is Unrevised in Q4’24
- Inventory drag on economic growth remains largest in almost two years; net exports add minimally to growth.
- Sharp gain in consumer spending growth is unrevised while business investment declines.
- Price index gain is revised up.
by:Tom Moeller
|in:Economy in Brief
USA| Feb 27 2025Durable Goods Orders: Aircraft-Related Volatility
- New orders excluding aircraft were flat in January.
- But bookings for nondefense capital goods other than aircraft are perhaps picking up.
- Weekly increase somewhat larger than forecast.
- Insured unemployment rate holds at 1.2%, same since late 2023.
Global| Feb 27 2025Global Money Supply – Some Recovery Afoot
Money event overview- Global money supply shows money supply in major money center countries is expanding. Money supply deflated for the impact of inflation is weaker and mixed contracting in Japan and in the United Kingdom along with credit in the EMU while real balances for the EMU and in the United States log positive growth is year-over-year in January. Inflation globally is over-target in the money center countries and areas where inflation of 2% is targeted.
The chart shows that money supply growth is steadily improving in nominal terms across countries, with the exception of Japan where M2-plus CD growth is gradually in a state of ongoing slowdown.
EMU In the European Monetary Union, nominal money growth has stepped up from 1.7% over three years, slowed to 1% over two years and accelerated to 3.3% over one year. Private credit growth has fallen from a 2.1% annual rate over three years, to 0.9% over two years and picked up to 2.1%, again, over one year. Real money balance growth in the EMU has progressed from -2.8% annual rate over three years to a -1.6% pace over two years to +0.8% over the last 12 months. Similarly, real credit to private residents has improved steadily but is still contracting by 0.4% over 12 months.
U.S., U.K., and Japan U.S. nominal money growth is gradually improving from an average of zero over three years to a pace of 3.9% over 12 months. Real balance growth in the U.S. also improves steadily from -4% over three years to +0.8% over 12 months. U.K. nominal money growth improves from 1.0% over three years to a pace of 2.7% over 12 months. U.K. real balances show monetary shrinkage, but the shrinkage is steadily lessening from -4.3% over three years to a pace of -0.8% over 12 months. Japan’s nominal monthly growth shows little variation, but it does gradually slow from 2.2% over three years to 1.3% over 12 months. Japanese real balance growth rates all are negative at -1.3% over three years, at -1.2% over two years and at a weaker -2.7% over 12 months. Japan’s inflation has recently picked up and after wondering if its inflation was real following a decade of deflation flirtation, Japan now has over-the-top inflation to deal with.
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