Introducing

Robert Brusca

Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.

Publications by Robert Brusca

Global| Feb 21 2025
PMI Reverses as Manufacturing Improves and Services Weaken in EMU
PMI gauges for the European Monetary Union show that the manufacturing sector that has been very weak is gaining some strength while the services sector that has generally had higher PMI values is eroding- it, in fact, has weakened for two months in a row. The aggregate statistics are now showing relatively weak standings for both manufacturing and services. Comparing the reporting units in the table, we see that among the eight reporters four of them have stronger queue percentile standings for manufacturing and four of them have relatively stronger queue percentile standings for services. The unweighted average of these shows the manufacturing average at a 40.8 percentile standing with services at a 42.1 percentile standing. Both of them were standings below the 50% mark meaning that for both of them performances below their median performance for the last four-plus years.

Monthly patterns The monthly data show, again I'm looking at the unweighted average of the eight-reporters in the table, that the composite reading has only very gradually deteriorated from 51.5 in December, to 51.4 in January, to 51.2 in February. This is a lot more like stasis than it is like weakening. The data showed that manufacturing has been creeping higher from a diffusion rating of 47.6 on an unweighted basis in December to 49.1 in January and 49.2 in February that contrast with services. For the December reading, services log a reading of 52.8, that gives way to 52.0 in January, and to 51.7 in February. Manufacturing is firming and services are easing although in percentile standing terms there's very little difference between the relative standings of the two sectors; however in diffusion terms services continue to be the sector above 50 which means that activity is expanding in services where manufacturing is closing in on 50 but doing it from below, indicating that the manufacturing sector is still contracting but contracting and ever slower pace. And, of course, the services sector is the job creating sector.

The beat goes on…faint as it is None of these observations are particularly encouraging or particularly depressing except that there has generally been economic underperformance and as far as that's concerned the beat goes on. There is fairly broad improvement going on in Australia, Japan, and Germany, but otherwise conditions are quite mixed on a monthly basis.
by:Robert Brusca
|in:Economy in Brief
Belgium| Feb 20 2025
Belgian Index Leads the Way Lower for Manufacturing Signals
The Belgian National Bank index for January remained negative, at a -13.6 reading, close to its December value of -13.8. The manufacturing index in January improved to -19 from -19.9 in December, still substantially weaker than its -16.7 value in November.

Over three months the Belgian index is down by 0.8 points; over six months it's down by 1.3 points; however, over 12 months it's rising by 2.8 points.

The result for manufacturing is similar to the headline; the three-month change of -0.7, a six-month change of -4.1 and a 12-month change of +3.0.

Despite the increases in the survey over 12 months which are more frequent than the decline to cross the various components, the three-month changes are largely negative and of course the readings for January are broadly negative.

For manufacturing, the production trend in January deteriorated sharply to -14 from -7 in December, compared to +8 in November. Despite this recent deterioration, the index shows a 5-point increase over 12 months but then the 13-point decline over six months and a 13-point decline over three months.

Orders are not reassuring The domestic order trend has become volatile and volatile amid weaker numbers with a reading of -11 in January; that's an improvement from -21 in December but also a sharp deterioration from -1 in November. However, the sequential change data complicate the picture a great deal with the domestic order trend up by 5 points over 12 months, up by 9 points over six months, but then up by only 6 points over the three months. Foreign orders show deterioration monthly from a +7 in November to -23 in December and another -23 reading in January. The sequential changes, however, are negative with a 6-point drop over 12 months, a 19-point drop over six months, and a 6-point drop on balance over three months. Despite all negative readings on a diffusion basis in January and December, domestic orders show sequential advancing while foreign orders show sequential deterioration. But the queue standing all are weak as we shall see.

Prices Price trends became more deeply negative monthly. In January, the reading was -7, compared to -3 in December and -3 in November. Sequentially price trends are becoming more negative with a 2-point drop over 12 months, an 8-point drop over six months, and an 8-point drop over three months.

Industry overall The current assessment in the survey has deteriorated slightly in the last three months but for neither total orders nor foreign orders has there been very much change. At -39 in January total orders are 2-points weaker than they were in November and at -48 foreign orders are 4-points weaker than they were in November. Looking at the sequential changes, total orders are up by 6 points over 12 months, down by 2 points over six months and up by 4 points over three months. Foreign orders are lower on all horizons: lower by 3 points over 12 months, lower by 15 points over six months and lower by 2 points over three months.

Other sectors Assessments of other sectors, wholesaling & retailing, construction, and business services show net negative numbers for January, December, and November except for business services that post positive numbers but positive numbers that are losing momentum from November to January. Sequentially wholesale & retailing show an improvement over 12 months of 0.5 points but a decline of 12.8 points over three months. Construction shows improvement in all horizons; a gain of 8.3 points over 12 months, underpinned by a 4.1-point increase over three months. Business services show a decline over 12 months of 2.6 points and a decline of 1.8 points over three months.

Rank standings of January diffusion readings The rank standings of the diffusion values for January show weak numbers up and down the line; every single category is below its 50th percentile, putting all of them below their median readings over data back to September 1997. The strongest reading is for the construction sector at 41.9%. The second strongest is for business services at 31.5%. Wholesaling & retailing have an 11.6-percentile standing, with the total industry at 10.9% and manufacturing at a 7.9 percentile standing. The Belgian survey continues to be weak across all categories and the momentum is mixed to the negative side. This is not a reassuring report. What’s worse is that it looks like it's a reasonably good bellwether for what goes on in Germany and in the European Monetary Union. The January report for Belgium is a month ahead of those two surveys and it does not portend better readings for them.
by:Robert Brusca
|in:Economy in Brief
Germany| Feb 19 2025
German Orders Surge in December – Still Weak
Inflation adjusted German orders rose by 6.9% in December after falling by 5.2% in November. Foreign orders rose by 1.4% in December after a November plummet of 10.3% (a drop at a 72.9% annualized rate). Domestic orders jumped in December, rising by 14.6% (w/ another extremely sizeable, annualized rate if placed on an annualized basis). This followed a 3.5% increase in November.

The bright side is that German domestic orders have been rising for two months in a row by a sizeable amount. They are growing at a 61.4% annualized rate over three months and showing building momentum and acceleration from 12-months to 6-months to 3-months. Foreign orders are more erratic; they fall by 11.4% over 12 months as well as at a 29.6% annual rate over three months- but they also rise over six months. So, the direction for Germany orders overall is unclear, but there is now clear strength in domestic orders and more hopeful forces in play for orders overall than we have seen for some time. In the just completed quarter, domestic orders rise at a 134.8% annual rate over Q3 while foreign orders fall at a 29.1% annual rate compared to Q3.

Real sector sales decline overall and for all of manufacturing. There are increases in sales for consumer goods and intermediate goods that rate dominated by a decline in capital goods real sales over three months. Sequentially total and manufacturing real sales both show weakening, declining a sign of progress, albeit not very aggressive progress. Still, it is something. Capital goods sales have stopped decelerating. Consumer goods sales are on an accelerating path with sales up at a 10.3% annual rate over three months. Intermediate goods sales are progressing from small declines over 12 months and six months to logging an increase over three months.

Both manufacturing sales and orders show signs of turning around although there have not been any such signs from other reports. The recent ZEW survey for February showed improved macro expectations in Germany and less weakness in the economic situation. By sector, profits showed improvement in construction and in services but not much in manufacturing industries. PMI data from S&P have not tipped any clear improvement in German manufacturing while services continue to plug along mostly showing growth but not a whole lot of it.
by:Robert Brusca
|in:Economy in Brief
Germany| Feb 18 2025
ZEW Expectations for Germany Make Sizeable Gain
Improved macro outlook The ZEW financial experts in February see improved conditions in Germany, perhaps just in time to affect the German elections that are due. Macro-expectations for Germany in February moved up to 26.0 from 10.3 in January while U.S. expectations backtracked to 1.3 in February from 9 in January. German expectations have 54.8 percentile queue standing on data since since 1992; the standing for the United States reading on the same timeline is 50.4%. The macroeconomic expectations for the U.S. and for Germany are very different in terms of diffusion readings in February; however, their percentile standings are surprisingly similar. The diffusion reading is a raw better minus worse reading while the percentile reading ranks the current value against an historic queue of observations. The lesser expansionary reading for the U.S. compares historically about as favorably to past data as does the comparisons of the stronger German diffusion reading to its past data.

Current situation still floundering However, the economic situation continues to be very different in Europe and in the United States. The readings for the euro area, Germany, and the United States all improved in February, but by small amounts. For the euro area, there's an improvement to -45.3 in February from -53.8 in January. For Germany, the improvement is to -88.5 in February from -90.4 in December. In the U.S., it's another small improvement but from 40.1 in January to 42.6 in February. U.S. is logging substantial positive reading, compared to quite deeply negative diffusion readings in the euro area and in Germany. This is made clear by looking at the queue percentile standings for the EMU for February; it is at its 35th percentile, the standing for Germany is at its 6th percentile, and the standing for the United States is at its 62.5 percentile – a world of difference there.

Inflation expectations Inflation expectations are mixed in February, but the euro area in Germany shows weak inflation readings and some tendency for expectations to see inflation even weaker. In the U.S., the inflation readings are positive in diffusion terms and much closer to normal levels. The queue percentile standings for the euro area are around the 20th percentile; the same is true of Germany at its 21st percentile. For the U.S., there is a 54th percentile standing above its historic median- a world of difference in the standings.

Interest rate expectations These differences play out across interest rate expectations as well, but not quite as strongly. The diffusion readings for short-term interest rate expectations find more deeply negative readings in the euro area, -83.2 in February, compared to its -76.2 in January. These readings compare to the U.S. in February at a -27.2 reading, a substantially less negative result than the -39 reading in January. U.S. readings have been progressing more rapidly toward zero as the December reading for the U.S. was set at -71.6. Even so, the queue standing for the U.S. reading was a 16.4 percentile standing for short-term interest rates. The queue standing for the euro area is at a 2.7 percentile standing. Despite the great difference in the diffusion readings, the queue percentile standings for each of them are basically readings in the same extremely weak region. Long-term rate expectations show Germany with a -2 diffusion value in February compared to -7.8 in January; for the U.S., the February reading moved up to 18.7 from 7.3 in January. The German negative numbers are moving up, toward zero, while the U.S. positive numbers are getting higher, so both Germany and the U.S. see long-rate expectations moving in the same direction. The German queue standing for its rate expectation in February is an 11-percentile standing while the U.S. queue standing at a 26-percentile standing is higher, but both of them are relatively weak standings, both of them well below their historic medians.

Stock markets Stock market expectations are weak across the board with the euro area queue standing at 1.3%, exceptionally weak. The German queue standing manages to get below that at 0.5%. U.S. stock market standings are better on a ranking basis but still not very good at the 20.8 percentile standing; they're well below the 50th percentile which marks their median. However, the diffusion reading in U.S. stocks is positive at 12.1; for Germany it's -4.7 and for the euro area it's -0.8; all of these reflect relatively sharp deteriorations from levels in January or December.
by:Robert Brusca
|in:Economy in Brief
Italy| Feb 12 2025
Italian IP Finds the Edge of the Earth…and Falls Off
OK…the earth is not flat. No one is falling off ‘the edge.’ But the decline in Italian IP across sectors is abrupt and the fall is sharp as though it has fallen into some sort of abyss. The chart is very telling. The table is too. The table is ‘coded’ with negative values in red except for ranking data where values are red when they are below their respective medians (below 50%). Among 45 categories in the IP portion of the table, only four are positive! In the lower portion of the table, the indicators and their standings show 27 observations of which four are not negative and among those four, three are zero. None of this is reassuring. Italy is experiencing some sudden broad weakness after having shown a good degree of resiliency. Manufacturing IP as well as two of its three main sectors – as well as transportation- show ongoing decelerating trends.

There is little here to equivocate on. Everything is weak and most categories are showing sequential worsening. Quarter-to-date growth rates for IP or changes in the indicators are negative everywhere except for manufacturing IP. Compared to the January 2020 level of IP categories or of survey values, all observations are weaker than their levels of five years ago. That is almost breath-taking. That’s half a decade.

Ranking data are largely at or below their 25th ranking percentile. Six of the eight categories show rank percentile standings below their 15th percentile.

Outlook/assessment Much of Italy’s weakness is new. Since January 2020, IP is lower by 10%, but over the last 12 months it is down by 8.4% - that is the bulk of that net drop. Transportation output is down by 13.7% since January 2020 and by 19.4% over the last 12 months. Indicators show the EU index for the industrial sector in Italy lower by 4 points from January 2020 and down by 1.7 point over 12 months. Italy’s ISTAT index has fallen 5 points over 12 months and the bulk of its 6-point drop since January 2020. The ISTAT outlook for production is down by 2 points over 12 months and lower by 7 points since January 2020. On balance, Italy’s industrial sector is looking extremely weak. It seems to be under new and severe downward pressures. At a time of global weakness and ongoing manufacturing weakness, this remains a sector to watch closely.
by:Robert Brusca
|in:Economy in Brief
Australia| Feb 11 2025
Australia in Broad Slowdown Mode
Business confidence in Australia rose according to the National Australia Bank (NAB) Business Survey, but business conditions in January eased to a +3.2 reading from +6.2 in December. At that level, they are a tick above their November reading but still well below their respective, 3-month, 6-month, and 12-month averages. On the same tenor of comparison, confidence is higher in January while business conditions are eroding.

The components of the index are broadly weaker in January with only 31.3% improving, after 75% improved in December, following 25% improving in November. That’s a somewhat jagged past to disentangle. However, looking at improvement over 12-months compared to 12-months ago, six-months compared to 12-months, and 3-months compared to 6-months, we see the breadth of improvement rising from 37.5% over 12 months to 50% over six months to 68.8% over three months.

Still, the average business conditions readings are sequentially easing, profitability is sequentially easing, so are trading conditions, labor costs, purchase costs and capacity utilization. Items that are sequentially strengthening (or easing by progressively less) are forward orders, exports, and exporters’ sales.

The ranking of the various components shows a narrow group of categories with readings above their medians (above a ranking of 50%) involving prices, costs, and capacity (labor costs, purchase costs, prices, capacity utilization, and stocks). However, employment was close to a 50-percentile standing, at 49.8. This is broadly true, globally, as unemployment has remained low and the labor markets have generally remained strong even in the face of sub-par economic growth, especially in the manufacturing sector.

Compared to the period before COVID struck only six categories are higher – five years later. Stocks are higher by 4 points and employment by 5.8 points; the rest (labor costs, purchase costs, prices, and capacity utilization all are higher by less than one point). Profitability, forward orders, and capital expenditures are each down by more than 5 points on this timeline comparison.

On balance, Australia is still struggling. Confidence is improving but current business conditions are weakening. It’s not clear how that will sort out. Also, the confidence metrics are broadly weak with upward pressure most prevalent on prices and costs, unfortunately. Globally conditions remain touch and go with a good deal of weakness still prevalent and much of the world is bracing for what U.S. tariff policy might do. The current situation is difficult, and the outlook calls for caution.
by:Robert Brusca
|in:Economy in Brief
Netherlands| Feb 10 2025
Dutch Production Falls
Industrial production in the Netherlands fell by 1.1% in December and declined broadly across key categories. The output decline comes after two monthly rises in a row. Output has been vacillating, showing declines month-over-month in six of the last twelve months.

Sequentially output (IP excluding construction, the headline series) is lower by 2.2% over 12 months, falling at a 1.6% annual rate over six months then rising at a 2.8% annual rate over three months. In the just completed Q4, output is falling at a 0.5% annual rate. On data back just before the start of COVID to January 2020, output is up by 0.5% a very narrow gain over such an extended period. Separately, ranking the year-on-year IP growth back to 2020, the current growth rate stands at the 20.4 percentile, near the boundary for the lower one-fifth of its queue of data. And the S&P manufacturing PMI gauge ranks on data back to January 2020 at its 35.4 percentile, also a low standing. However, they compare most closely to manufacturing, whose output growth rank is an extremely weak 3.7 percentile.

The table and the chart combine to provide as clear a picture as we can get of the manufacturing sector. In the table, we see cross-currents as manufacturing performance varies by sequential period and, of course, increases as periods of calculation shorten. Over three months, all categories show output increases, except transportation, where output falls hard. Over six months, output falls in all main industries. Over 12 months, output falls in three-categories and rises in two. Sequentially overall output is improving, moving from weak and shrinking to growing. Manufacturing has the same pattern while transportation output trend consistently worsens. Food & beverages as well as mining & quarrying are without clear trend but both show increases over three months and 12 months and decline over six months.

The queue rankings (on 12-month growth rates) for IP show strength for mining & quarrying with a 98-percentile standing for its 17.8% y/y growth. The food and beverage industry has an above 50%, standing at 55.6%. Manufacturing overall and transportation equipment have standing below their respective 15th percentiles.
by:Robert Brusca
|in:Economy in Brief
Global| Feb 05 2025
Global Total PMIs Remain Weak and Back Down in January; New Year- Same Old Story
Conditions this month remain mixed and weak. It’s a relatively robust overview and one we have been reporting for some time.

The Process It is always difficult to evaluate and to summarize global data because, of course, different countries and regions are always doing different things. An aggregation of data leads to some weighting process which will cause the evaluation of world events to turn on how the largest countries, populations, or economies, are doing. My evaluation of this data set will turn on looking at the medians or the averages for the reporting country PMIs as well as looking at diffusion data which tell us how broadly the various respondent countries are performing. These data are supplemented by percentile ranking or standing data that will tell us where the current month’s reading stands relative to observations since January 2021. Together we will get a more complete picture of how countries – and the global economy- generally are faring. This approach will generate a set of data to help understand individual countries in a global context rather than a context that will simply focus most on the largest countries.

Having made those points, looking at the sequential data at the top of the table, we can see that the group of Western economies including the United States, the European Monetary Union, and its four largest economies, generally are better than they were 12-months ago and worse over 6 months than they are generally over 12 months and also generally worse over 3 months than they were over six months so large economies are generally dragging these results down over recent monthly data. November showed broad weakness, December showed a broad rebound among the large economies compared to November, and now in January there is backtracking again with mixed results.

The summary data at the bottom of the table showed that the overall median gain for the 25-country sample is generally eroding but not very rapidly from 51.7 in November, to 51.1 in December, to 50.9 in January. This is a stepwise erosion but it's also a relatively modest erosion. The median also steps down from the 12-months to 6-months to 3-months (averages), once again, falling at a snail's pace with the 12-month median at 51.5 and the 3-month median at 51.1. Conditions really are much more static than weakening but these are still relatively weak responses. For example, the far-right hand column is the queue standing which positions the January data in a queue of data since January 2021. On that basis, the January median has a ranking that averages at its 42.9 percentile; the average standing for the group has a ranking in the 44.9 percentile- both of these figures, of course, are below 50% which means they're below their median for that period of time. The average standing for the U.S., the U.K. and the European Monetary Union is 38.8%, slightly weaker than for the group as a whole. The BRIC countries that at one point were pushing a great deal of strength now have a 25.2 percentile standing -with Russia excluded- but those raw diffusion readings are still higher than the unweighted readings for the U.S., U.K., and the European Monetary Union. This simply underscores the fact that the BRIC countries have been doing relatively well.

The persisting good news in this report in January is that there are only 5 jurisdictions with composite PMI readings below 50, which means only five countries or areas in which conditions were actually contracting. That compares to six in December and seven in November so that on a monthly basis there's been a slight move to having fewer countries experiencing economic contraction. However, it's not a particularly broad movement since the 12-month, 6-month, and 3-month averages are fairly stable, counting five to six countries in the declining category over broad period. However, looking at the ranking data more broadly the queue percentile standing shows 16 countries below a ranking of 50 for the queue percentiles. For rankings data ‘50’ does not enshrine the difference between rising and falling for output; rather it designates the median for the period, so the bulk of countries are below their medians although very few countries are contracting.

At the bottom of the table, we look to see the proportion of countries that are slowing. Over January and December slightly more than half are slowing although in November fewer than half were slowing only 44%. The 12-month, 6-month, and 3-month averages that compared 12-months to 12-months ago six-months to the 12-month results and 3-months to the six-month result show that slowdown is broadening with slowing evident in 43.5% of countries over 12 months, rising to 69.6% over 6 months and holding at 60.9% over 3 months.
by:Robert Brusca
|in:Economy in Brief
Global| Feb 03 2025
S&P Manufacturing PMIs Show Better Breadth But Ongoing Weakness
Manufacturing PMIs in January show continued weakness; the median for the 18 countries and the table weakens slightly in January compared to December and remains weaker than the November median as well. Diffusion calculations, however, show that there are more reporters and the table with manufacturing PMIs improving month-to-month in January with 61% of them improving compared to only 28% of them in December.

Progressive statistics that look at the percentage improving in three-months compared to six-months as six-months compared to 12-months and 12-months compared to a year-ago show diffusion improving from 39% to 44% to 67%-sequentially. For the current 3-month versus 6-month comparison, diffusion shows improvement in 67% of categories. Diffusion has been steadily rising, as the sequential comparison demonstrate, although that has not been accompanied by a steady increase in the median reading for the group – indicating how complicated it is to develop overarching metrics for the group. The median reading for 12 months is at 50; over six months that slips to 49.6 and over three months there's a slight recovery to 49.8. Diffusion indexes improve in three months compared to six months, but they're still lower than they have been over 12 months on average and the reading for diffusion over three months shows a tendency for manufacturing to contract.

The far-right hand column presents queue rankings that order the January estimates on data back to January 2021. On that basis, there are only six of the 18 observations that lie above a rank at the 50th percentile which means there are only 6 (or 1/3) above their medians for this period. Countries with observations above the median are Russia, India, Canada, Mexico, Indonesia, and Taiwan. The average of the median ranks is 40.8 percentile, a number clearly below breakeven output at 50 and indicating shrinking manufacturing activity in general.

The rankings by individual countries still show a great deal of variation and weakness. Japan and China, for example, have queue standings for the manufacturing observations in January that are in their 14th and 16th percentile rankings - these are extremely weak. Vietnam is in its 28th percentile, Turkey is in its 24th percentile, but even France has a reading only in its 22nd percentile. The euro area has a ranking at its 40th percentile, the same as Germany with the same ranking as the United States which is also in its 40th percentile. Manufacturing simply continues to be weak in January.

In January, eight of eighteen observations log diffusion values above 50 (indicating manufacturing expansion); this compares to seven in December and eight in November. Sequentially the three-month average of the PMI readings shows seven over 50-for three-months and six-months with nine averaging above 50 for the full 12-months. There has been slippage in recent months compared to the 12-month performance. And there may be more trouble ahead.
by:Robert Brusca
|in:Economy in Brief
Europe| Jan 31 2025
EMU PPI Shows Flashes of Heat in December
In the wake of a meeting by the European Central Bank and release preliminary GDP results for the Monetary Union in 2024-Q4 as well as for key countries, we're now getting some early inflation data that puts policy in conflict with economic data. At the meeting, ECB president Christine Lagarde made it clear that the central bank had cut rates and that it sees inflation on a path to come down to target. In the wake of that meeting, an announcement of GDP data for the Monetary Union showed extreme weakness for the union in the fourth quarter with GDP growth essentially at a standstill and with growth slowing quarter-to-quarter in nearly all of the countries that reported GDP on an early basis. However, the economic data for inflation don't seem to be cooperating.

Is a bird in the hand really worth two in the bush? Economists say No… There is an old expression that economists seem to turn on its head that expression is this: “a bird in the hand is worth two in the bush.” Translating this into economic data, we have actual economic data, and we also have forecasts for the future. Economists always want to make policy not based on the data in hand but on the forecast for the future (those ‘in the bush’). However, like the hunter who thinks that there are still two in the bush, the ECB, thinking it they can rely on forecasts of inflation may cause it to come home with nothing to eat. However, economic theory is pretty clear that monetary policy works with a lag and therefore it is beneficial to look at forecasts for inflation to make policy today. But that only works if the economist can forecast well, and we know that we can't forecast GDP well or inflation that well and that poses a dilemma for policy.

Despite the ECB forecast that inflation is coming to path, this is an uncomfortable PPI report released in December. It has the core PPI up by only 0.3% compared to a 0.1% rise in November. The inflation progression moves from 2.8% year-over-year to 2.4% at an annual rate over six months, to 2.7% at an annual rate over three months. That's a relatively mild and not entirely clear pattern toward acceleration. On the month, inflation has broken lower with 10 early reporting European countries all showing an inflation in December with a smaller gain month-to-month than what it showed in November. However, encouraging that might be, November brought sizable gains for a number of these countries where 79% of them saw inflation accelerating in November; a deceleration in December isn't quite as impressive, accounting for that. Moreover, if we look at countries reporting data over 12 months, six months and three months, we see that over 12 months compared to a year-ago inflation is accelerating in all of these countries. For six months compared to 12-months, inflation is accelerating in about 56% of them. For 3-months compared to 6-months, it's accelerating in all of them. Over three months, six of these ten reporting countries are showing annualized PPI inflation in double digits! This does not seem to be something we should take lightly even though the headline increase for the period for the euro area is only 2.7% annualized.

HICP inflation for January is mixed In addition, HICP data for January has been released on a preliminary basis for three of the larger the monetary union economies: Germany, France, and Spain. In each case, inflation is accelerating over three months to a higher pace than over six months. For Germany, the 3-month pace is 4.4%, for France it's 2.4%, and for Spain it's 7.1%. These accelerations have brought the year-over-year pace for Germany to 2.8%, for France to a still moderate 1.8%, and for Spain to 2.9%. Germany’s ex-energy inflation is still relatively flat at 2.4%, over three months lower than its 2.8% 12-month pace. For Spain corn inflation at 2.1% over 3-months is moderate and lower than its 12-month pace of 2.4%.

Core inflation is solid, as far as it goes The inflation picture in the core available for two countries is relatively benign, although the inflation rate for the headline for the three early reporting countries is not reassuring. In addition to that, we have PPI data that are showing some very intense pressure on a more widespread basis than we should be comfortable with.
by:Robert Brusca
|in:Economy in Brief
Global| Jan 30 2025
EMU Fourth Quarter Growth Stalls as Unemployment Ticks Higher at Yearend
Growth in the European Monetary Union (EMU) came to a near standstill in the fourth quarter of 2024 as overall annualized growth expanded at a 0.1% annual rate, the smallest measurable rate that would appear on this table. Among the seven early reporting monetary union members in this table, six of them show growth decelerating in the fourth quarter compared to the third quarter. Overall weighted GDP for the monetary union decelerated from 1.6% at an annual rate in the third quarter to 0.1% in the fourth quarter growth. Growth rates were negative for France, Germany, Ireland, and Italy. However, pooling the four largest economies together produces a growth rate of zero in the fourth quarter compared to 1.1% in the third quarter. Spain’s 3.1% fourth quarter growth rate saves the Big-4 aggregate GDP reading from logging a negative number. Away from the four largest economies, the rest of European Monetary Union saw growth plunge lower to 0.4% at an annual rate in the fourth quarter from a 3.2% annual rate gain in the third quarter.

Growth conditions in the monetary union are poor. Ranking statistics put the performance of GDP growth in context. Only two countries in the table, Portugal, and Spain, have growth rankings above their 50-percentile mark which represents the median for each series over this period. The EMU has a growth rate ranking at its 32.6 percentile; that puts it in the lower third and its queue of ranked data. The four largest Monetary Union economies show a growth ranking in a 28.3 percentile, while the rest of the Monetary Union performs better with the growth ranking in its 40.2 percentile. These statistics compare to the United States that has an above median ranking at its 53.4 percentile over the same period.
by:Robert Brusca
|in:Economy in Brief
Global| Jan 29 2025
Money Supply Growth Generally Elevates; Japan Is the Exception
Money supply growth globally shows broad acceleration across countries. 12-month growth is faster than it was 12-months ago for every country in the table except the United Kingdom. Compared to growth rates two-and three-years ago, all countries show current money growth is stronger.

Monetary stimulus is in play. Monetary growth also shows shorter-term building stimulus as 6-month growth exceeds its 12-month pace and 3-month growth exceeds its 6-month pace broadly- in all countries except the U.K. In the EMU, this sort of sequential growth is also advancing for credit in addition to for money.

Monetary and credit stimulus is in train – at least nominally.

Real variables, however, show flat to slightly weaker real money growth in the EMU. Similarly, in the EMU, credit growth runs from slightly weakening to flat growth and growth rates that are still negative reveal contracting credit.

Elsewhere real money growth in the United States has transitioned from a contraction in real balances over two years to showing growth and accelerating real balance growth from 12-months to six-months to three-months. However, the growth in real balance effects is not broad outside the United States. U.K. real balance growth remains negative, and it shows real balances shrinking at an increasingly rapid pace. The same is true in Japan where real balance growth is contracting at an increasingly rapid pace. Only the U.S. shows real balances and nominal money growth accelerating.

The most interesting observation here is the finding that nominal money balances are accelerating but real balance growth is weakening or flat except for the U.S. where both show increasing stimulus. Inflation has generally stopped falling and in each country in the table; the 12-month low for inflation is higher than the current year-on-year pace for all countries– and most show at least a minor inflation uptick is in progress.
by:Robert Brusca
|in:Economy in Brief