Economy in Brief

Industrial output among EMU members fell by 1.8% month-to-month in March following a 0.5% increase in February and a 0.8% decline in January. The corresponding S&P Global manufacturing PMI index for these three months shows declines in March and February but an increase in January.

Looking across the countries in the table, there are 13 European Monetary Union members and three non-EMU members. We see output declines in nine countries as of March. This is a step up from 6 declines in February and it compares to 8 declines in January.

Sequential growth rates show that six of the countries in the table have decelerating output over three months, only two have decelerating output over six months and five have decelerating output over 12 months.

The consolidated figures by sector showed that overall European Monetary Union output declines by 0.9% over 12 months, increases at a 1.2% annual rate over six months but then declines sharply at an 8.1% annual rate over three months. Quarter-to-date, output is rising at a 3.7% annual rate- with today’s report the first quarter data are complete on a preliminary basis. Manufacturing output in the quarter-to-date is even stronger, rising at a 5% annual rate. Looking at sector trends, the consumer sector shows output up at a 13.3% annual rate, led by a 15.1% annual increase for consumer nondurables compared to a 4% annual rate of increase for consumer durables in the quarter-to-date. Intermediate goods output rises at a 1.4% pace while capital goods output is falling at a 0.5% pace.

The sequential growth rates for sectors show clear cut acceleration for consumer durable goods output. Consumer nondurable goods output looks healthy but fails to go over the bar to have consistent acceleration since there's a small step back over six months but the three-month growth rate at a 12.3% pace is well ahead of its 12-month growth rate of 2.8%. Intermediate goods output falls over 12 months by 0.2%, runs flat over six months, and then falls at a 5.9% annual rate over three months. Capital goods output, similarly, falls over 12 months by 2.9%, marks an increase at a 2.7% pace over six months, then falls very sharply at a 21.2% annual rate over three months. These data show relatively healthy increases in the consumer sector with uneven or weakening trends for intermediate goods and capital goods with some severe encroaching weakness for capital goods.

Capital goods not only show that output is lower in the quarter, when compared to the pre-COVID level, output is also lower- that is over two years ago. Capital goods output is down 5.7% from its level in January 2020. All the other industrial sectors show increases. This decline in capital goods is enough to knock manufacturing output down by 0.4% on the same timeline well overall industrial output falls by zero point 7% on the same timeline.

Going back to country details of the 13 reporting European Monetary Union countries, six of them have declining output in the quarter-to-date; however, none of the declines are among the four largest EMU economies Germany, France, Italy, or Spain.

Five EMU countries still have levels of output that are below their levels of January 2020 before the virus struck. These include Germany, France, Malta, Luxembourg, and Portugal. In addition, non-EMU member, the U.K., has output lower by 0.5% on this timeline and Norway has output lower by 0.8% on this timeline.

Pricing power overall at the retail level moderated in April, but the details show evidence of continued pricing strength. The Consumer Price Index rose by 0.3% last month as expected in the Action Economics Forecast Survey, following an unrevised 1.2% March rise. The 8.3% y/y gain was below the 8.5% y/y pace set in March and stood a hair under the previous peak 8.4% y/y set in January 1982.

Prices excluding food & energy rose an expected 0.6% last month, doubling the March rise. It was the strongest increase in three months. The 6.2% y/y gain jumped from a recent low of 1.3% y/y set in February 2021.

A 2.7% decline (+30.3% y/y) in energy prices led the moderation in pricing strength overall during April, following an 11.0% March increase. Gasoline prices fell 6.1% (+43.6% y/y) after reaching a record high in March. Fuel oil prices, however, surged 2.7% (80.5% y/y). Natural gas prices strengthened 3.1% (22.7% y/y) while the cost of electricity rose 0.7% (11.0% y/y).

Food prices remained strong last month, rising 0.9% (9.4% y/y) which was similar to the increases in each of the prior three months. Meat, poultry, fish & egg prices rose 1.4% (14.3% y/y). Cereal & bakery product prices also were strong and gained 1.1% (10.3% y/y). These increases were offset by a 0.3% decline (+7.8% y/y) in fruit & vegetable prices.

Services prices rose 0.7%. The 4.9% y/y gain compared to 1.3% y/y at the start of 2021. The cost of public transportation surged 12.1% (21.8% y/y). Shelter costs increased 0.5% (5.1% y/y). The owners' equivalent rent of primary residences gained 0.5% (4.8% y/y) as rents of primary residences rose 0.6% (4.8% y/y). The cost of medical care services increased 0.5% (3.5% y/y). Recreation services prices gained 0.4% (4.4% y/y) while education prices edged 0.2% higher (1.7% y/y).

Goods prices excluding food & energy rose 0.2% (9.7% y/y) in April after a 0.4% March decline. Price changes within categories were mixed. Used car & truck prices weakened 0.4% (+22.7% y/y), the third straight monthly decline, but new vehicle prices rose 1.1% (13.2% y/y). Education & communication product prices fell 2.6% (-4.0% y/y) as recreation product prices gained 0.5% (4.0% y/y). To the upside, home furnishings prices rose 0.5% (10.6% y/y) but household appliance prices fell 0.5% (+7.8% y/y). Apparel prices declined 0.8% (+5.4% y/y).

The Consumer Price Index data can be found in Haver's USECON database with additional detail in CPIDATA. The Action Economics survey figure is in the AS1REPNA database.