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 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
France| Jan 28 2025
INSEE Household Confidence Makes January Gain Three-Month High
The INSEE household confidence indicator in January 2025 rose to 91.7 from 88.6 in December; the index sits now at a three-month high; it's still below its October level of 93.5.

• Living standards over the next 12 months are expected to show improvement as the reading moves to -47 in January from -58 in December. • Unemployment expected over the next 12 months is lower with a net diffusion reading of 47 in January compared to 54 in December.
• Price developments show expectations for weaker inflation ahead over the last 12 months. Past price developments move from a reading of three in December to two in January. Looking ahead to the next 12 months, the reading falls to -43 from -33, a significantly weaker outlook for inflation. • The ability to save over the next 12 months is unchanged in January compared to December. The favorability of the savings environment is slightly better at 38 in January compared to 34 in December. • The favorability of the environment for making a major purchase is slightly better but little change, with a reading of -28 in January, up from -29 one month ago. • And the financial situation over the past 12 months as well as the next 12 months is improved slightly from what it was in December. Over the past 12 months, conditions were assessed at -22 compared to -23 a month ago; over the forward-looking next 12 months, the outlook has a reading of -10 in January, an improvement from -14 in December.

Some monthly improvement but still a weak report On balance, however, the household confidence index is weak. We rank it among its various values since January 2001 (Rank % column); the ranking is in its 36th percentile, barely above the lower one-third of its historic queue of data. Living standards over the next 12 months mark a 27.6 percentile standing while the expectation for unemployment over the next 12 months is a relatively high 67-percentile, leaving it in the top one-third of its historic rankings – an uncomfortable level for ‘expected’ unemployment. Note that it does not mean that two-thirds of the respondents expect unemployment. The ranking just means that whatever the level of unemployment that is expected that expectation is higher only about one-third of the time.

Price developments showed that over the past 12 months, the inflation expectation stood in its 52.5 percentile. However, looking ahead, that has dropped-down to its 18.6 percentile; a significant improvement in the outlook for inflation.

The favorability and ability to save over the next 12 months are both high readings and their high, 97th percentile responses to this question, often indicate economic impairment. When the rankings are high for savings, conditions are often under stress. The favorability to spend to execute a major purchase improved slightly month-to-month, as we saw above, but has only a 20-percentile standing, a lower one-fifth reading for the favorability to spend.

The financial situation over the last 12 months had a 54-percentile standing; looking ahead to the next 12 months, it seemed to be slightly weaker with a 48-percentile standard, slightly below its historic median.
by:Robert Brusca
|in:Economy in Brief
Germany| Jan 27 2025
Germany’s IFO Shows Ongoing Weakness and Growing Denial
The IFO climate gauge deteriorated in January, falling to -26.7 from an index value of -26.0 in December. Climate deteriorated in manufacturing, construction, and retailing; it improved in wholesaling and in services. The wholesale gauge improved from -35 in December to -32.4 in January while services improved to -2.2 in January from -5.6 in December. Clearly, the economy is experiencing cross currents with the important services sector improving but deterioration having a larger impact on overall climate.

Current conditions showed improvement in January with the all-sector index improving to -3.9 from a reading of -6.2 in December. Current conditions improved across the board for all reporting sectors. The largest month-to-month improvements by sector are for wholesaling and services.

Expectations worsened over-all month-to-month. The all-sector reading fell to -23.4 in January from -23 in December. All sectors deteriorated with the exception of services that improved to -17.0 in January from -19.7 in December and wholesaling where expectations were flat at -34.8 in both January and December.
by:Robert Brusca
|in:Economy in Brief
Global| Jan 24 2025
Composite PMIs Improve Except for the U.S.
The S&P composite PMIs in January improved across the board, with the exception of India and the United States. In the U.S., the PMI headline dropped back sharply on sharp weakness in the services sector in the month in the face of what had been resiliency and strength.

From roughly February to July of 2024, the persistence of declines by sector especially in manufacturing diminished. However, now things have shifted, and we are again in a period when there seems to be more deterioration. The prevalence of manufacturing AND service sector deterioration together has reappeared.

The Russian invasion was a real catalyst of change for the EU, Germany, France, the United Kingdom, Japan, and the United States. Before Ukraine, the recovery from COVID was under way and both services and manufacturing sectors were running policies that left each sector with 50% or higher ranking in 60% to 100% of countries. After Russia’s aggressive action, both sectors were crushed across all these countries; the service sector rebounded first and from March 2024 to date services stood at a ranking above 50% or more in 60% to 100% of the countries. But in the post-invasion environment, the manufacturing sectors showed only about 20% of reporters above a 50% queue standing for manufacturing. Manufacturing continues to be hard hit and well short of normalcy.

Currently we are in another round of weakness looking at a broader group of early reporters that adds India and Australia into the mix. Still, six-month changes show weakness in at least two of three months or three of five months for manufacturing and service sectors. Together they are falling over the same six-months. The ‘best performance’ on this metric apart from the U.S. is Australia where manufacturing has improved on balance over six months for two months running but only after three months of deterioration on that basis.

U.S. performance is an outlier in several ways. The US service sector fell sharply in January, depressing services as well as the composite metric. But over six-months both US services and manufacturing have failed to worsen together for 16-months in a row.

The U.S. has been an anomaly in terms of international performance characteristics. U.S. manufacturing is weakening on balance over six months in six of the last seven months. But the service sector has risen on balance (over the previous six months) in 12 of the last 13 months.

The new sharp weakness in U.S. services (month-to-month) is an issue of it has any staying power.

The four-year queue standing of the manufacturing across eight countries and three sector readings (for each: two sectors plus a composite) shows only five of 24 of these rankings with standings above the 50% mark (above their respective medians) over the past four years. These readings are manufacturing in India (79.6%), services in Germany (63.3%) and services in the EMU (barely…. at 51.0%), and a 59.2 percentile standing for Japan’s service sector (the same for its composite).
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Jan 23 2025
U.K. Order Trends Are Still Eroding
EU order trends ‘improved’ slightly in January as the net diffusion reading rose from -40 to -34. Still, that improvement leaves orders below their 3-month, 6-month, or 12-month averages. The queue standard of January orders is in the lower 14th percentile of its historic queue of data. Obviously, it remains a historically weak reading. The order series is volatile as the chart shows. But it is still in a clear downtrend even with the uptick this month.

Export orders have approximately the same profile as for orders overall. But export orders weaken slightly in January compared to December. Export orders overall have a slightly weaker queue standing than total orders at a 13.4 percentile level.

The diffusion readings for stocks of finished goods weakened in January but even with its weaker January assessment, stocks have a firm-to-strong 72.5 percentile standing.

Looking ahead, the outlook for output volume over the next three months improved sharply from its stunning weak reading of -31 in December. However, the rise to -19 in January represents only a 4.8 percentile standing.

Unfortunately, average output prices for three months ahead has reading of +27 in January, up from +23 in December and +11 in November; the backtracking in prices expected, has brought the expectation level for the current reading to a high, 90-percentile standing. These rising inflation expectations are going to be a real problem for the Bank of England.

IP data lag the CBI survey responses. The manufacturing IP growth rate, year-on-year, has a 17.4 percentile standing as of its most recent observation in November 2024. That is also very weak. The CBI results are not giving a different message from the industrial production data, but they are timelier.

The ramp up in inflation expectation is not good new with CPI-H inflation at 3.5% year-over-year and with the core pace at 4.2%. Core inflation, sequentially, is looking stable around the 4.2% pace; for the headline, the pace has accelerated from 3.5% over 12 months to a pace of 5.4% over three months. These results, coupled with the rise in CBI expectations, are not good news for the U.K. or for the BOE.
by:Robert Brusca
|in:Economy in Brief
New Zealand| Jan 22 2025
New Zealand Core and Headline Inflation Stop Falling; Headline Near 2%; Core Near 3%
New Zealand’s CPI shows an acceleration in the fourth quarter of 2024 compared to the third quarter. The year-over-year increase is at a relatively modest 2.2%; however, the New Zealand core that excludes food and household energy as well as vehicle fuels is running at 3.1% over four quarters. The inflation progression for the core takes inflation down to 2.5% over two quarters then back up to a 2.9% annual rate over one quarter. The graph shows that the decline in the year-over-year core and headline inflation rates have stopped in this most recent quarter; that raises the question about where inflation goes next.

There is nothing final about the pause that we see in the drop in inflation. It might be a pause that then continues its downward move, or it might not. However, as you can see from the chart, taking away the big inflation hump that we had during COVID and extrapolating a trend line from before COVID inflation puts inflation on an accelerating path. In fact, inflation, whether measured by the headline or the core, shows both above those previous trends even if we set aside the bulge of inflation during COVID.

However, inflation news is resplendent for its ability to give us mixed signals! The more that we look at it, the more it stares back in confusion. If we look at the CPI categories, we see inflation acceleration is not common: over four quarters it's occurring in only 8% of the categories; over two-quarters it's occurring in 25% of the categories; over one quarter it's occurring in only 42% of the categories. Comparing inflation month-to-month, the accelerations are below 50% for the fourth quarter, the third quarter, and the second quarter. Second-quarter inflation breadth was especially narrow even though the headline increase was slightly more in Q2 than it was in Q3. Such is inflation.
by:Robert Brusca
|in:Economy in Brief
Germany| Jan 21 2025
ZEW Expectations Are Mixed But Eco-conditions Still Weak
Assessments and expectations This ZEW survey for January shows mixed results. The economic situations in the euro area, Germany, and the United States, as currently perceived, improved month-to-month while expectations in the U.S. were essentially unchanged and economic expectations for Germany deteriorated. The U.S. had the largest increase in the assessment of the current economic situation. The U.S. diffusion reading rose by 9.1 points, the German situation improved by 2.7, points and in the euro area it improved by 1.2 points.

Inflation expectations Inflation expectations rose in all three areas with the euro area seeing expectations rise by 9.1 points, Germany is seeing an increase of 9.7 points, and the U.S. experiencing an increase of 11.9 points. Given that, economic reports have been somewhat uneven, as you can see the assessment of the current situation has nonetheless improved. Along with that, inflation expectations are beginning to rise more or less across the board. Inflation is generally already above levels that central banks are targeting.

Interest rates- short-term expectations Short-term rate expectations rose in the euro area by 12.5 diffusion points and by a whopping 32.6 diffusion points in the United States. With the election of Trump and expectations that there will be tariffs imposed, and tax cuts extended, and pro-growth policies implemented, there is a decided turn to the expectation for higher inflation and for that to create knock on effects for higher short-term interest rates. At the last policy meeting, the Federal Reserve cut its policy rate; the Federal Reserve is still looking for rate cuts sometime later in the year even though it's not looking to get back down to its inflation target this year, creating a somewhat strange perspective on Fed policy. Policy continues its inflation overshoot; yet, it continues to cut interest rates. I suspect we're on the cusp of seeing that policy change, but it has not changed yet. Here we see the ZEW experts seem to be on board for that policy undergoing some substantial changes in the months ahead.

Long-term rate expectations Long-term rate expectations declined in Germany and in the U.S. and despite the outlook for somewhat higher inflation the outlook for higher short-term interest rates may be enough to mollify expectations on longer term rates and also may be a vote of confidence that central banks will do the right thing when inflation rises by raising short-term rates enough. This survey seems to conform the expectation to contain more distant inflation pressures and allow long-term rates to hold in.

Stock markets That view would be consistent with the stock market assessments that are lower in all three areas. In the euro area, the stock market assessment falls by 5.5 diffusion points; in Germany, it falls by 12.7 diffusion points; in the U.S., it falls by 1.8 diffusion points. That means that the ZEW financial experts are looking for stock market cap performance to back off despite better current economic conditions lowered expectations for Germany but not for the U.S. and in the midst of this expectation for higher inflation and substantially higher short-term interest rates as well. It's an interesting changing view from the ZEW experts and it paints a picture of the future that seems to be increasingly likely.

Queue standings U.S. queue standings- The table also includes the queue standings for the various measures in the top part of the table. There we see only the U.S. has queue standings for some measures that are above 50% placing them above their longer-term medians (above 50% standings). Those are for the economic situation, for economic expectations and for stock market expectations. U.S. inflation expectations, however, are getting higher at 43.8%, closing in on their historic median, while short-term rate expectations are still relatively low at 13.2% and the level of long-term expectations in the U.S. is at 17.3% also relatively low.

German queue standings- Germany has an economic situation at its the 4.9 percentile standing - extremely weak. Expectations are better with the 35.6 percentile standing with inflation at the 22.7 percentile standing. The euro area short-term rate expectations (EC) are at 5.8% and the German long-term rate expectation is at 8.2%; both of those are low. The expectation for the German stock market is extremely poor with the 1.9 percentile standing.

The euro area queue standings- Compared to Germany, the euro area has a 24.9 percentile standing for the current situation. Inflation expectations are at a 20.6 percentile standing, with short-term rate expectations at a 5.8 percentile standing and stock market expectations in the eurozone around 8% still quite low.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Jan 17 2025
U.K. Retail Sales Volumes Slide
U.K. sales volume for retail sales has been slipping roughly since mid-2024. The 3-month volume index is falling at a 4.4% annual rate over three months. Sales are up at a scant 0.2% annual rate over six months and by 3.5% year-over-year. Passenger car registrations show weakness falling at a 7.6% annual rate over three months, gaining at a 4.6% pave over six months, and then showing contraction at a minor -0.1% rate over 12 months.

Volume Trends Apart from the sequential data, the monthly volume results show a decline in December, a gain in November and a drop in October. The monthly nominal data show small nominal gain in November and December against a sharper nominal decline in October.

U.K. nominal sales QTD relative nominal decline in the fourth quarter with retail sales volumes also show decline dropping at a 2.9% annual rate overall. Passenger car registrations are falling at a 12.4% annual rate in the fourth quarter.

Surveys and Confidence U.K. surveys on retailing for the ‘time of year’ and the ‘volume of orders’ from the Confederation of British Industry (CBI) show sputtering monthly results. The CBI reading for time of year (TOY) and volume of orders (VoO) both show net decline of three months. VoO also falls over six months whereas TOY sales are higher over six months. Both TOY and VoO sales are higher over 12 months. TOY sales are up by 2-index points while VoO sales are up by 28 of their index points. While the year-on-year survey results show short-term agreement, their year-on-year signals seem different. But their long-term ranking results alone again show similarity at the TOY sales log a 21.8 percentile standing vs. VoO that is even weaker at a14-percentile mark. It is an even weaker full-sample standing despite the better 12-month gain. We often see this sort of thing in data comparisons. But if surveys are well-constructed, they usually track but there often are still disparities. That is true here as well and we can nit-pick the details but the overarching message here is that conditions are weak. Consumer confidence from GfK has been volatile over the span but when we rank the confidence index, it stands at 40.5 percentile level, which is stronger than for the surveys but still below its median and barely over half the standing of real retail sales growth.

Rankings/Standings The consumer confidence standing is interesting at 40.5% but it is not ‘close’ to the volume ranking which is at its 77-percentile. The confidence ranking is still slightly below its median. The retail sales ranking is applied to real sales and their 12-month growth rate. The ranking of sales volume is much higher than any ranking registered by CBI surveys or by consumer confidence. Passenger car registrations are weak, too, at a 47.2 percentile standing. In contrast, nominal retail sales have a 60.6 percentile standing. Part of that is the boost they get from the 80.9 percentile standing from the CPI-H, from inflation.
by:Robert Brusca
|in:Economy in Brief
Europe| Jan 15 2025
EMU Industrial Output Sputters Ahead
Industrial output in the European Monetary Union continued to struggle. In November, it has advanced (for the headline series excluding construction) for the second month in row. However, a sharp drop in September leaves the three-month change in output falling at a 4.8% annual rate. Output still grows by 0.2% at an annual rate over six months but falls by 1.9% year-over-year. The output path is not draconianly weak, it is not even clearly weakening further, it is simply still challenged, fighting what appears to be still-stiff headwinds.

Manufacturing sector trends- Manufacturing output results are nearly the same as for the headline. Manufacturing sectors show progressive weakening from 12-months, to 6-months, to 3-months for consumer goods output. Both consumer durables and nondurable goods output show sporadic weakens but it is only when they are combined that consumer goods output as a total makes the progressive nature of weakening apparent. Intermediate goods output declines on all horizons from 12-months to 6-months to 3-months, but it is not clearly trending. Capital goods output drops over 12 months and falls even more sharply over three months but manages to make a gain over six months preventing a clear statement about the trend being made.

EMU PMI for MFG- The manufacturing PMI for the EMU is below 50 for each of the last two months and over three months, six months, and 12 months as well.

QTD: Quarter-to-date- Quarter to date IP tracking shows declines in all sectors except capital goods output. Tracking output developments since COVID arrived from January 2020-to-date, output is higher only for overall consumer goods and that is driven only by the component consumer nondurable goods output. However, capital goods output is nearly unchanged on that horizon; the current level of capital goods output is lower than its January 2020 level by only 0.5%.

Growth rankings- The ranking of year-on-year growth rates for November compared to all year-on-year growth rates since early-2007 shows no sector ranking higher than 38%. All rankings are below their median rates of growth over this period. The growth ranking for overall IP and for manufacturing are near their 25th percentiles marking them essentially lower quartile growth results.

Country data The country data for 13 EMU members show four declines in November month-to-month following five with month-to-month declines in October and seven in September. The breadth of weakness on this measure has been diminishing. The country of declining output over 12 months, six months, and three months has been progressively falling as well -another good sign. And the median annualized growth rate has been rising over this span. However, quarter-to-date as of November, there are still seven countries showing output declines in progress with one at unchanged. Output is rising QTD in only five of thirteen EMU nations. However, in terms of growth rankings, there is relatively stronger growth only for the smallest countries in the EMU.

Summing up Growth rankings are above the 50% median mark only for Finland, Greece, Belgium, and Malta. The big four economies Germany, France, Italy, and Spain, each have growth rankings below their respective historic medians with an average ranking of 26.5% - again near the lower quartile border. The EMU area is performing poorly with growth sputtering and weak growth still the order of business across sectors as well as across member nations.
by:Robert Brusca
|in:Economy in Brief