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

Japan| Mar 20 2026
Japan’s Manufacturing IP Accelerates
Manufacturing output in Japan rose by 4.3% in January after rising by 0.7% in December. Total industrial production rose by 2.8% in January after a flat performance in December. By major sector, consumer goods output, intermediate goods output, and investment goods output all increased in January; each had a strong pace in January after two of three sectors experienced output declines in December and November. However, the output recovery in January is strong and solid, putting the trend for industrial output and manufacturing back on solid footing.

Sequential growth rates in Japan show overall manufacturing is growing over 12 months, six months and three months, without any particular increase or decrease in the underlying trend. The 12-month growth rate is 2.5%, the six month pace is at a 3.6% annual rate, and the three month pace has eased back to 2%.

Sequential growth rates for manufacturing are much more upbeat, with manufacturing up by 2.5% over 12 months, running at an 8.3% annualized pace over six months, and accelerating further to 12.3% at an annual rate over three months.

The main manufacturing sectors also are very upbeat, with consumer goods output rising 1.2% over 12 months, accelerating to a 3.8% pace over six months, and accelerating further to a 6.5% annual rate over three months. Intermediate goods output shows a tendency for acceleration that later calms down over three months. The 12-month pace is 3.1%, the six-month pace rises to 5.7%, and over three months the pace is back down to 4%, which is cooling from the six-month pace, but still an increase from the 12-month rate.

For investment goods, the 12-month growth rate is 3%; it rises to a 9.8% annual rate over six months and accelerates further to a 17.3% annual rate over three months. Investment goods profile is reassuring and even eye-popping, showing significant strength at a time that yen weakness is helping to make production in Japan much more profitable.

Japan is experiencing this improved performance after a long period of underperformance going back to the pre-COVID period. Industry output is 88.2% of its January 2020 level; manufacturing output is 89.4% of what it was in January 2020. By sector, consumer goods output is 87.7% of its January 2020 level, intermediate goods output is 86.5%, and investment goods production is 88.7% of what it was in January 2020.

The quarter-to-date, which is a very nascent figure since this reflects only January data, shows total industry output rising at a 12.7% annual rate, with manufacturing growing at a 27.1% annual rate, supported by double-digit increases in the growth rates of consumer goods, intermediate goods, and investment goods output.
by:Robert Brusca
|in:Economy in Brief
Germany| Mar 17 2026
Germany’s ZEW Survey Sours
The ZEW survey, which is a survey of German financial experts, showed a weakening in March as the economic situation deteriorated sharply in the wake of the start of the war in Iran. For the euro area, the reading dropped to -29.9 in March from -13.6 in February; for Germany, the reading surprisingly improved a slight bit to -62.9 from -65.9; for the United States, a positive reading of 4.5 was still posted; however, it was down significantly from +19.6 in February. China’s reading fell to -33.7 from -31.5. The rank standings for these readings on data back to late-1992 for most reporters, but only back to April 2021 for China, shows the euro area at a reading near its median over this span. While Germany and the U.S. are substantially below their medians, with percentile standings near 30% for Germany and near the 40th percentile for the U.S. China logs a stronger queue standing above its median at 68.3%.

Macro expectations fell more clearly and sharply for all the reporters in March. For Germany, the drop was to -0.5 in March from +58.3 in February, while the U.S. drop was to -28.7 from -5.1 in February. China’s drop was to -15.8 from +13.1 in February. The standings for these March readings place China at a 1.7 percentile standing, the U.S. at a 16.1 percentile standing, and Germany at a 25.1 percentile standing. All of them are quite weak in the lower quartile of their respective queues of data.

With oil prices jumping sharply, inflation expectations have simply skyrocketed on the month. For the euro area, the reading that was near 0 in February jumped to 79 in March. For Germany, a reading of -2.3 in February surged to 79.2 in March. For the U.S., an inflation expectation of 43.1 in February nearly doubled to 80.4 in March. For China, a February reading of 10.5 ran up to 56.0 for March. The queue percentile standings for the March readings rose to the 98th percentile for the euro area, Germany, and the U.S., while China's standing also moved up strongly to its 93rd percentile, when ranked over a shorter period extending back to April 2021.

With inflation going up, short-term interest rate expectations rose as well. Those expectations rose in the euro area, the U.S., and China. For each of these reporters, there was a significant increase in the short-term rate expectations. The euro area expectation survey value has a standing in its 70.9 percentile, China’s standing is at its 55th percentile, while the U.S. standing is still below its median at its 22.4 percentile.

Long-term rate expectations moved up in all areas as well, with Germany's new reading having a 66.8 percentile standing, China at a 75th percentile standing, and the U.S. at a 59th percentile standing. Each one of these is above its historic median. Long-term expectations are elevated.

Stock markets in all areas weakened in March compared to February, with most showing declines of about 50% or so in this survey. The queue standings for the new readings are all in the lower 25th percentile of their respective data queues. Some of them are significantly lower, such as Germany, which stands only in its 9th percentile. On balance, the attack in Iran has been a game-changer for economic perceptions and expectations. Markets are wary. And everyone knows the centerpiece is the Strait of Hormuz. But that does not make it much easier to handicap the future.
by:Robert Brusca
|in:Economy in Brief
Canada| Mar 16 2026
Canada’s Industrial Orders Falter
Canadian orders fell by 3.3% in January after running flat in December and falling by 1.1% in November.

The top-line sequential growth in orders shows contraction over 12 months, six months, and three months, with the pace of contraction having gotten more severe over the most recent three months.

In January, orders declined, while unfilled orders rose but decelerated from their December growth rate. Manufacturing shipments fell, durables shipments fell, durable shipments excluding motor vehicles fell, and motor vehicle shipments fell. In addition, nondurables orders declined in January although at a lesser pace than in December. Among this key batch of industrial statistics, only manufacturing inventories rose in January, increasing by 0.9%.

Progressive growth rates from 12 months to six months to three months show progressively weaker growth in shipments of durable goods, durables excluding motor vehicles, and motor vehicle shipments themselves. Inventories are also shrinking, and at a progressively faster pace over shorter periods. The headline series for orders shows a 16.5% annual rate contraction over three months, compared with a contraction pace of 7.4% over 12 months. There is no sign of stabilization in orders, and this shows up plainly in the data or on the chart.

The column heading marked “standing” shows that the standings of all the items listed in the stub are below 50%, placing each entry below its median based on data back to 1999. Judging from 12 month growth rates, the only exception is unfilled orders, which are right at the 50.4 percentile mark. For the most part, the shortfalls from their respective medians are quite severe, with the low standings for manufacturing shipments and durable goods shipments at 7.4%, out done only by a 1.8 percentile standing for motor vehicle shipments growth. The table also ranks the categories on six month growth rates, providing a slightly shorter term view to see how much conditions improve. On that basis, and viewed in that way, most of the rankings do improve. In fact, all rankings improve compared to the year over year growth rate rankings except for three: unfilled orders, durable goods shipments, and durable goods shipments excluding motor vehicles.

The six-year growth from January 2020 to date shows declines in real terms (inflation-adjusted net changes) for unfilled orders, durable goods shipments, durables shipments excluding motor vehicles, and inventories of manufactured goods. Increasing on balance over six years are orders and total manufacturing shipments, but by very thin margins. Motor vehicle shipments are up by 0.7% in real terms over six years, while nondurables shipments are up by 2.1% on balance over the same period. It has been a very difficult period for industry to cope with the strains from COVID, the war in the Ukraine, and more recently, the imposition of tariffs by the United States.
by:Robert Brusca
|in:Economy in Brief
Europe| Mar 13 2026
EMU IP Trends Are Decidedly Negative
Broad and severe weakness in European production: industrial production data for the monetary union turned decidedly sour in January. All major production categories showed declines in January, including the headline series for production excluding construction and manufacturing output. There were also drops across the major manufacturing sectors—consumer goods, intermediate goods, and capital goods—as well as in both of the consumer sub categories of durable goods and nondurable goods. January was a really tough month for the industrial sector and the European monetary union.

Sequential output weakness as well: Output is not only falling in every category in January—and for two months in a row—but the sequential growth rates over 12 months, six months, and three months also show decelerations present for all of these categories of output except capital goods. That means the six-month growth rate is weaker than the 12-month growth rate, and the three-month growth rate is weaker than the six-month growth rate for six of seven of these categories—the exception is capital goods. And capital goods are a minor exception with the growth over three months only slightly stronger than over six months, and at that it's still a negative growth rate. It shows a decline in output, just a slower decline. There is no silver lining here, just clouds and rain.

Quarter to date and more: As if that's not enough, these are output data for January so we can calculate quarter-to-date growth rates in the first quarter. On that basis, all seven of these categories show output declining, and output is declining in all seven of these categories at a double-digit pace! In addition, when we step back to compare growth rates over the last year with previous 12-month growth rates back to April 2006, a 20-year horizon, we find that all the growth rates in the table lie below their median rates of growth for this previous twenty-year span. Capital goods fare the best, with a percentile standing of its growth rate at its nearly 48th percentile, just slightly below its median, which lies at a ranking of 50%. The growth rates for consumer nondurables, for example, have had output growth weaker during this period, only 1.7% of the time. Consumer goods output has been weaker, only 3.8% of the time. Manufacturing output is in the bottom quartile among historically ranked growth rates. These are extremely bad and consistently poor rankings for industrial growth.

The table also offers up country-by-county data for January. Looking just at monetary union members, seven of twelve show output declines in January, but that compares to December, which was a strong month with only three of those members showing output declines. However, a month earlier, in November, eight monetary union members had shown output declines. There are sequential output declines reported by Germany, Spain, and Ireland over the last twelve-to-six-to-three months. Only Malta and Greece show output trends that are accelerating, and of course, these are two of the smaller monetary union countries. Seven monetary union countries show quarter-to-date output is declining early in this first quarter. Among the five countries showing output increasing, two of them showed double-digit growth rates in the new quarter and those two again are Malta and Greece. For the countries overall, only five of twelve have queue percentile standings of their earlier growth rates that are above their historic medians for the last 20 years. That list of five includes France, Malta, Greece, Portugal, and Austria.

The industrial data for Europe in January are decidedly downbeat and concerning. These numbers are being reported before hostilities in the Middle East began to ramp up and clearly before oil prices spurted higher. The European manufacturing sector is not digging itself out of the hole it fell into after COVID and the invasion of Ukraine. And after showing a hint of recovery, it now appears to be deep in the morass of economic weakness.
by:Robert Brusca
|in:Economy in Brief
Japan| Mar 12 2026
MOF Japan Business Outlook Survey
Japan's Ministry of Finance business outlook survey shows a slow but positive improvement in the outlook for employment among large firms, while the outlook for large manufacturing firms’ hiring continues to cycle and oscillate around zero (see Chart).

The assessment on current observations of the economy slipped to +4.4 for all large enterprises in the first quarter of 2026, compared to +4.9 in the fourth quarter of last year. For large manufacturing enterprises, the assessment slipped to 3.8 from 4.7. There were also slippages reported for medium-sized enterprises as well as for small enterprises; for both the total and manufacturing sectors, assessments were worse, the smaller the reporting unit (on both a net reading basis and a percentile standing basis).

The quarter-ahead assessment slipped to 3.7 from the 4.4 assessment of the first quarter for all large enterprises. For large manufacturing enterprises, the outlook slipped from plus 3.8 in the first quarter of this year to -1.1. The second quarter ahead outlook, however, improved to 4.7 from 3.7 for all large enterprises, and the manufacturing outlook for two quarters ahead picked up to 3.3 from -1.1 in the quarter ahead. However, that 3.3 outlook for large manufacturing enterprises is still below the first quarter assessment (of 3.8) as well as below the fourth quarter and the third quarter assessments of 2025.

The percentile standing of the quarter-ahead assessment for all large enterprises is 44.6. For manufacturing firms, the percentile standing is 38.4, and for nonmanufacturers it is 62.2. The percentile standing values compare the current observation with a history of observation readings back to 2007; values above the 50th percentile are above their historic medians. We can see for the quarter ahead for large enterprises all of their responses are above their medians, and the relative strength resides among nonmanufacturing enterprises; they report the highest standings.

For the second quarter ahead, the percentile standings slip for the total group of large enterprises as well as for manufacturing and nonmanufacturing, separately. This occurs even though the net assessments improve from the quarter ahead to two quarters ahead. You can get an inkling ‘why’ by looking at the ‘average’ and noting that the average two-quarter ahead reading has been higher than the average quarter-ahead reading. So, to rank higher than the quarter-ahead, the second-quarter ahead has a higher hurdle to go over. The standing for nonmanufacturing slips from a 62.2 percentile for the quarter ahead to a 58.1 percentile standing for the second quarter ahead. Large manufacturers take a relatively large step back to a 28.4 percentile standing two quarters ahead from the 38.4 percentile for one quarter ahead. These step backs are reflected in the headline which steps back to 37.8 for two quarters ahead from a 44.6 percentile standing for the first quarter ahead.

What is evident in this survey is that large enterprises that the MOF surveys are becoming increasingly pessimistic as we look farther into the future, since the current rankings for all large enterprises, large enterprise manufacturers, and large nonmanufacturers show the strongest percentile standings among this triad of readings for the current quarter, with the quarter-ahead standings weaker and two-quarter-ahead standings weaker still. This growing pessimism is not a good feature.

Medium and small enterprises not as dismally inclined Medium-sized firms: The transit to greater pessimism that we see for large enterprises as we look further into the future does not carry over to medium enterprises. Medium enterprises do see lower readings for the quarter ahead compared to the current-quarter assessments, and generally the quarter ahead provides assessments that are below the 50% mark, making them below median expectations as well. However, for two quarters ahead, the percentile standings improve, and at least for medium-sized manufacturing enterprises, there is a reading above the 50-percentile mark for that category two-quarters ahead, putting it even above the 45.2 percentile reading posted for the current quarter.

Small firms: For small enterprises, there is no real generalization across the various types of firms. Manufacturing firms’ percentile standing from the current quarter to the quarter ahead just about halve themselves, a sharp step back for manufacturers. However, for nonmanufacturers, there's an improvement from a 56.2 percentile standing in the current quarter to a 60.3 percentile standing in the quarter ahead. These two groups are moving in opposite directions for two quarters ahead. Manufacturers stop that deterioration and gain back just a small measure of what they lose in the quarter ahead with their two-quarter ahead standing, while nonmanufacturers lose some of their ebullience as the percentile standing drops to a 50.7 percentile reading from 60.3 but still sports an above-median value.
by:Robert Brusca
|in:Economy in Brief
Japan| Mar 11 2026
Japan Indicators: Strong Economy—Still, Large Question Marks
Japan's economy may not be firing on all cylinders, but the economy is looking pretty firm, and consumer confidence is just pushing up through an area that has defined several of its post-COVID peaks. Inflation in Japan is uncomfortable. The PPI index rose 0.2% in January and is running at 2.4% year-over-year. The headline CPI for January declined by 0.1% and is running at a 2.4% annual rate, above the Bank of Japan’s preferred target. However, it only has a 61.7 percentile standing compared to a 71.7 percentile standing for the PPI—above its median but not terribly high on data back to 2006.

Retail sales: Key Japan activity variables are showing sustained expansion. Retail sales in January rose by a sharp 4.6%. The sequential growth rate for retail sales mushrooms from a 1.9% pace over 12 months to a 7.3% pace over six months to 15.8% pace over three months. That’s very solid and extremely strong.

Exports: But with the yen weak on global exchange markets, Japan's exports rose by 9.9% in January. The sequential growth rate for exports is 16% over 12 months, which jumps to a 38.7% pace over six months and then jumps again to a 67.8% annual rate over three months. These are stunningly strong figures.

Jobs: Employment in Japan continues to show month-to-month gains, but the gains are not historically strong, even though the sequential performance is sound at 0.5% growth over 12 months and picking up to 0.6% at an annual rate over three months. That’s not bad for a country with fading demographics. However, the standing for employment is only at its 45th percentile, putting it below its median, which occurs at a ranking of 50%. On the other hand, the ranking is not far below its median, with its 45.3 percentile standing.

LEI: Japan's leading economic index rose by 1.9% in January, accelerating from its December increase of 0.6%. Again, the sequential growth rates for the LEI are strong and hint at acceleration, with a 2.5% gain over 12 months, a 9.9% annual rate gain over six months, a pace that is nearly maintained over three months, where the growth rate comes in at a nearly identical 9.2%.

Surveys: The LEI, viewed as a level, is showing ongoing gains and has a historic standing that is near its historic median. The economy watchers index has weakened in the past few months, but the sequential averages show ongoing upward momentum and a historic ranking above its median at a standing in its 52nd percentile.

Inflation: The inflation numbers are the ‘fly in the ointment’ for Japan, although neither the PPI nor the CPI headline (headline excluding fresh food) shows a tendency - a strong tendency - to accelerate. However, there's a war in the Middle East. Oil prices are going up, and that’s going to hit Japan hard — and it’s going to have an inflation effect.

What will central bankers do? One of the key questions moving forward is how central banks are going to deal with the inflation effects from oil, because while it clearly gives a supply shock, it's a relatively large one and nobody is sure how long-lived it's going to be and how much of this supply shock will get into the core inflation measures beyond just the headline.
by:Robert Brusca
|in:Economy in Brief
Germany| Mar 10 2026
German Exports and Imports Slide in January; Sharp Import Drop Boosts Surplus
German trade flows weakened in January, with imports dropping 5.9% month to month and exports falling 2.3%. With both flows falling sharply and imports dropping at more than twice the rate of exports, the trade surplus in the month ballooned to €21.2 billion from €17.4 billion in December.

The progression of nominal growth rates for exports shows the slowing from 0.6% over 12 months to 0.3% over six months to -3.1% at an annual rate over three months. The import decline is weaker and is gathering even more downward momentum, with imports falling 4% over 12 months, dropping at a 7.4% annual rate over six months, and reaching a 15% annualized decline over three months.

Measured in real terms, exports fell by 2.9% in January as imports fell by 6.8%. The sequential growth rates for German exports and imports both show progressive deterioration, with imports weakening faster than exports. This trend is worrisome because it says that the nominal weakness is not just because of what prices are doing. Weak imports usually indicate weak domestic demand; for Germany, that could be a really bad signal. In addition, because Germany exports so much to other EMU nations, German export weakness raises questions about demand strength among fellow EMU members - and about global demand in general.

Lagged trends Lagged results give us a look into export and import trends with a one-month lag. As of December, both exports and imports still rose month-to-month. Sequential export growth was steadily accelerating, while sequential import growth rates were already decaying. German consumer goods exports were accelerating sequentially, and the ‘other exports’ category is not on its own acceleration path, but the category remains strong.

For imports, the overall nominal flows were decelerating from 12-months to 6-months to 3-months. Capital goods and motor vehicle imports both showed sequential weakening. Consumer goods imports were oscillating but still generally strong. Other imports were on a recent accelerating path, switching from negative 12-months growth to a 1% gain over six months and a 4% pace of increase over three months.

Summing up On balance, German trade trends show a lot of weakness. Much of it seems to have welled up in January ahead of the new Middle East conflict. Right now, German economic data and diagnostic trade data are not sending out good signals about the German economy.
by:Robert Brusca
|in:Economy in Brief
Germany| Mar 09 2026
German Output Trends in January Break Lower
The German industrial sector falters German industrial output in January fell for the second month in a row; it has a sequential pattern of growth rates becoming progressively weaker from 12-months to six-months to three-months. This is not a good pattern or development. Orders also fell sharply in January, dropping by 11.1% month-to-month. At least the orders progression is not as clearly negative as it is for industrial output, but over three months real manufacturing orders are declining at a 1.8% annual rate even though the 12-month and six-month growth rates of orders still show solid positive growth results.

These data are up-to-date through January, so they do not contain any effects of the new conflict in the Middle East.

Sequential output trends German industrial output trends show progressively weaker numbers from 12-months to six-months to three-months. Consumer goods output and intermediate goods output show progressively weaker sequential results. Capital goods output shows a skinny rise of 0.1% over 12 months, a 6.6% decline at an annual rate over six months, and then a lesser pace of decline of 2.8% over three months. Capital goods output is not getting progressively weaker; however, it has been weakening and the trend is disappointing.

German survey results are less dire Other indicators of German industrial activity generally show improved monthly results. All four of the metrics in the table show improved survey values in January compared to December, but December had showed weakness relative to November across the board for those 4 metrics. The message from progressive averages in the table, from these other indicators, is that not much has changed that would allow us to discriminate strongly among activity performances reported over 12 months, six months, or three months. In the end, the three-month values are generally slightly stronger than the 12-month values, but not in a way that looks significant, and even that result does not hold for the ZEW current index.

Industrial production in other Europe Industrial production trends for other European reporters show declines in output in January of a fairly substantial magnitude in Spain and in Ireland, against strong increases in Portugal, Sweden, and Norway, and the more modest increase in France. IP in January shows cross-currents and a good deal of extremism in other Europe. The progressive trends for manufacturing production show Spanish and Irish trends deteriorating sharply from 12-months to six-months to three-months France and Portugal report uneven results that do not clarify what the underlying trend is doing. However, in northern Europe, Sweden and Norway are showing sharply accelerating growth from 12-months to six-months to three-months.

Quarter-to-Date (as of January) In the quarter to date, German manufacturing output is falling overall and for all its major components. German real manufacturing orders are falling at a 30.3% annual rate in the quarter to date, which is a nascent statistic since only January data are available now. The other industrial indicators show positive trends for most measures, with the IFO manufacturing expectation being the exception, as it weakens. Industrial production for other Europe shows sharp quarter-to-date declines in Spain and Ireland, with extremely strong quarter-to-date results in Sweden and Norway; there is strong performance from Portugal and a solid increase from France.
by:Robert Brusca
|in:Economy in Brief
Norway| Mar 06 2026
Norway: Output Advances in January
Industrial output in Norway rose by 1% in January after gaining 0.9% in December. Utilities output rose briskly, mining and quarrying output rose extremely sharply, while manufacturing output showed its second decline in a row.

The sequential growth rates show that the headline series for industrial production is decelerating, with nearly 7% growth over 12 months, nearly 5% growth over six months, and the growth over three months is down to zero.

On that same progression, utilities output has accelerated from 12 months to six months to three months, while mining and quarrying has a more complicated pattern—rising 1.5% over 12 month, falling at a 3.8% pace over six months, then rising at a 9.2% annual rate over three months.

In manufacturing, the trends are also complicated but with an upbeat ending. Manufacturing output is up by 2.2% over 12 months; the growth rate shows a decline, falling at a 0.4% annual rate over six months, with output then picking up and growing at a 5.9% annual rate over three months. Despite the setback in the middle, manufacturing has a positive year-over-year growth rate and shows strength over three months. This pattern is followed by food and also by textiles, with the exception that textiles are still showing a year-over-year decline of 0.9%. However, textile output is now growing briskly at a 7.4% annual rate over three months.

Norway is also experiencing a pickup in inflation. Its HICP inflation rate is 3.5% over 12 months, stays pretty much there with a 3.4% annual rate over six months, and then jumps up to a 4.9% annual rate over three months. However, that acceleration is tempered by a core inflation rate that is unchanged at 3.2% in each horizon. These growth rates are still excessive, with the central bank having a target of 2%; however, the inflation rate isn't getting any worse.

The industrial pattern for Norway is somewhat complicated by the fact that the headline measure for industrial production is showing a clear deceleration, while manufacturing is showing a more complicated pattern with some near-term acceleration over three months.

And for the quarter to date, which is a nascent comparison since the data are only available through January, we have overall industrial production growing at a 2.7% annual rate and manufacturing growing at a 2.2% annual rate. The quarter also shows inflation flying at a 3.9% annual rate, although core inflation is more tempered at a 2.6% annual rate pace.
by:Robert Brusca
|in:Economy in Brief
Europe| Mar 05 2026
European Retail Sales Dither While Auto Registrations Weaken
Motor vehicle registrations in January fell by 6.1%, while overall retail sales volume, a separate category, fell by 0.1%. Motor vehicle registrations are notoriously volatile; they increased by 1.8% in December and fell by 3.3% in November. Retail sales, however, have been more chronically flat, with no change in November, a 0.2% increase in December, and now a 0.1% decline in January. These numbers are quite weak because they're already inflation-adjusted, expressed in volume terms.

Sequentially volume sales are weakening in the EMU, with the growth rate slipping from 2.1% over 12 months to a 1.4% pace over six months to just a 0.4% annual rate gain over three months. Food sales have been more stable but have been somewhat more erratically weakened over this same period. Motor vehicle registrations have been imploding, falling by 3% over 12 months, dropping to a 12.4% annual rate over six months and plunging at a 27.1% annual rate over three months.

In the unfolding quarter to date, with one month's data in hand, first quarter retail sales are rising at a 0.2% annual rate; food sales are rising at a 2.7% annual rate. Motor vehicle registrations are declining at a 31.3% annual rate.

We can also inspect these data on a country by country basis. We have Germany and the Netherlands from the European Monetary Union, Sweden and Norway representing Northern Europe, the United Kingdom as a nonaligned former monetary union member, and lastly Denmark as an EU member.

Germany is the largest economy in Europe, and its sales fell in January. More disconcerting, sales in Germany are generally on a decelerating path, growing at a 1.2% pace over 12 months, at a 0.5% pace over six months, and contracting at a 1% annual rate pace over three months. The Netherlands, another monetary union member, is experiencing a very different trend, with sales rising by 3.3% in January and then accelerating from 12 months to six months to three months as growth rates have progressed from 1.4% to 6.1% to 8.8%, respectively. In Denmark, a European Union member but not a monetary union member, sales rose by 0.7% in January, while its sequential sales show growth rates of 3.7% over 12 months and 3.8% over six months, and then suddenly weaken to 0.4% over three months.

The United Kingdom is showing a progression of sales that is fairly firm. In January, sales rose by 1.9%. The annual growth rate is at 4.5% over 12 months, easing slightly to 3% over six months, and then jumping to 7.7% over three months.

Sweden and Norway are fellow Northern European economies but do not share the same trends in retail sales. In January, Swedish sales rose by 0.1%, while Norwegian sales rose by 1.1%. The progression of growth rates in Sweden shows sales over 4% over six months and 12 months, with the growth rate decelerating to 2.1% at an annual rate over three months. In Norway, 12-month and 6-month growth rates for sales are at 3% to 4% and then jump to a 7.3% annual rate over three months.

Monthly data on sales volume growth have been irregular. January was the most consistently strong month of the most recent three, albeit with Germany posting a significantly large drop in retail sales, which is disconcerting for the largest economy in the euro area.

The sequential data show sales accelerations in the Netherlands and in Norway juxtaposed once again to Germany, where sales growth rates are decelerating and culminate in declining growth over the most recent three months. Sequential data also show a clear deceleration in sales volumes for the euro area as a whole. In addition, there is a significant sales implosion for motor vehicle registrations on the same timeline.

The quarter-to-date data for the euro area show weak sales growth, while the country level data show sales increasing for all the countries in the table except Germany in the quarter to date, which is a nascent calculation at this point.
by:Robert Brusca
|in:Economy in Brief
Global| Mar 04 2026
S&P Composite PMIs Show Recovery Progresses
The composite PMIs showed modest increases on their full sample average and a modest step-back in the full sample median calculation in February. However, the number of areas below 50 fell to 4 in February; that count was only 5 in January, and there were none showing declines in December, so there's a great sense of progress in place. The proportion of reporters in February that were getting worse was only 40%, compared to 44% in January and 76% in December. So there has been a change for the better in terms of the proportion of these 25 reporters who are registering better growth month to month in the last two months, in particular.
by:Robert Brusca
|in:Economy in Brief
Global| Mar 03 2026
Inflation in Europe Picks Up – Ahead of Hostilities
Inflation in the European Monetary Union picked up in February, ahead of the beginning of new hostilities in the Middle East. The increase in the harmonized index of consumer prices moved up to 0.3% in February from 0.1% to January. Progression on the annual rate of price increase moved up to 1.9% over 12 months, to a 2.1% annual rate over six months, and to a 2.4% annual rate over three months.

This is a modest acceleration and not something to get particularly excited about, except that with new hostilities in the Middle East, oil prices have begun to rise significantly, and there will be apprehension about how much more there is to come. However, the initial oil price reaction was muted, and the follow-up price reaction has also been relatively muted so these will translate into a nontrivial impact on inflation and in the harmonized index for consumer prices in the monetary union, as well as in the key prices watched by central banks globally.

Big Four Economies The Big Four economies in the monetary union produced scattered results in February. Germany produced no increase in its February HICP. The HICP for France jumped by 0.4% month-to-month. Spain showed an increase of 0.2%; Italy reported an outsized increase of 0.7% in February. Still, the January and February data for this group of countries show prices mostly very well behaved. If we simply multiply these 12 increases (four countries over three months) together we get prices rising at a 2.2% annual rate across all the countries over the three months. That is close to target.

Annual and Sequential Big Four Inflation Inflation for the Big Four economies ranges from a top pace of 2.4% in Spain to the lowest pace of 1.1% in France with Italy's 1.6% and Germany's on-target 2% making up middle cases. Even the biggest price increase from Spain at 2.4% is not particularly frightening. Inside of 12 months looking at the six- and 3-month trends, Germany's trends move up to 2.6% over six months and then down to 1.2%. France's 6-month inflation remains at 1.1% over six months but then moves up to a 1.9% annual rate over three months. Italy's 12-month pace of 1.6% holds in place over six months, but then the 3-month inflation rate jumps to a 4.1% annual rate. For Spain, the 2.4% 12 month rate rises to a 3% annual rate over six months and then falls sharply to a 1.6% annual rate over three months.

Headline vs. Core Inflation Headline inflation rates, of course, are mercurial because of the impact of oil prices on them. Two early reporters gave us core inflation or ex-energy inflation rates. In the case of Spain, core inflation is stuck at 2.7% on all horizons. Germany's index excluding energy is at 2.4% over 12 months, but then Germany’s six-month pace falls to 2.2%, and its three-month pace falls again to 1.7%. In the case of Germany, 12-month ex-energy inflation is mildly acceptable, but progressing to the three-month horizon, the inflation rate drops back well into place. For Spain, the 2.7% 12-month inflation rate persists across all horizons and is unacceptably high.

Longer Trends Inflation is generally behaving and riding downtrends in the monetary union, with 12- month inflation generally lower than 12-month inflation was a year ago. That is true for all the major metrics in the table except two. The first exception is France when the 12-month inflation rate is 1.1% compared to 0.9% over 12 months a year ago (still, obviously very well behaved). In the case of Spain, core inflation moves up to 2.7% over 12 months after being at 2.2% just a year ago.
by:Robert Brusca
|in:Economy in Brief