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

Europe| Jun 27 2025
EMU Sentiment Indicators from EU Commission Show Easing
The EU Commission indexes for June 2025 shows erosion in the overall index to a level of 94 compared to 94.8 in May. The readings for France have become particularly weak in the last two months. As shown in the chart, it is apparent that the reading for France has fallen quite sharply during this period. France has posted index declines of 3.7% in consecutive months; these are quite large declines. The cumulative two-month drop for France has been larger less than 5% of the time back to 2015; Romania and Denmark (EU Member) also has experienced relatively sharp drops in the last two months. While Portugal and Belgium have experienced top 5% to 7% increases in the last two months. Germany has generally improved although it backed off in the current month. The euro area reading has been in a state of minor erosion; Italy is currently in a several month phase of having bounced back from a period of weakness. All-in-all it has not been a particularly good period for the European monetary union or in its large economies with the exception of Germany.

Sector performance The five sector or environmental readings that we have for the Monetary Union show erosion on the month for three of five of the readings. Improving month-to-month is the services sector which moved to a reading of +3 in June from +2 in May. The construction sector moved to a reading of -3 in June from -4 in May; however, eroding is the reading for retailing that fell to -8 from -7 in May; consumer confidence edged lower to -15.3 from -15.1 in May; and the industrial sector reading fell to -12 from -10 in May. The improvement is in the cyclical and small employment sector of construction but also in the major employment sector of services. Meanwhile the all-important manufacturing or industrial sector has eroded on the month and this is the sector we are focused on - and concerned about - particularly with tariffs in flux.

Rankings or standings by industry As of June, the overall European monetary union index has a 23.5 percentile standing on data since about 1990 while the industrial sector standing is in its 16th percentile, consumer confidence in its 18th percentile, and services standing in their 24th percentile. Retailing has a 46.4 percentile standing that moves it up closer to its median for the period (median readings on ranked data occur at a ranking of 50%). So, retailing is getting closer to a median performance while construction is above its median with a standing in its 77.5 percentile.
by:Robert Brusca
|in:Economy in Brief
France| Jun 25 2025
French Household Confidence Remains Weak
French household confidence ticked higher to 88.4 in June from 88.3 in May, retaining most of the drop from April to May.

June confidence has a 24.8 percentile ranking near the upper border of its bottom 25 percentile on a ranked basis. The standings are coded nearly uniformly in red, indicating bad economic results. While price diffusion below 50 is good news, weak prices like that also suggest ongoing weak economic activity. For most the survey indicates a standing below the 50th percentile that implies a reading below its median on this timeline back to 2001. Unemployment has a high 81 percentile standing and is coded read because a high standing for unemployment is bad news.

The favorability to save is strong. The standings had coded black. But often when the favorability and ability to save is high, it is because the spending environment is poor, and it is true here with the spending environment with a 26.5 percentile standing.

Living standards for the next 12 months have an extremely low 6.5 percentile standing.

Two columns to the right chronical changes in the survey value over two periods for Covid and to the invasion of Ukraine and then from the date of Ukraine’s invasion to the current observation. Among the increases in readings since Ukraine’s invasion is a sharp increase in expectation of unemployment and an increase in the favorability to save.

Not only is confidence net lower since the invasion but inflation assessments are lower as well.

The favorability to spend has increased since Covid struck but then after Ukraine was invaded the favorability to spend fell, unwinding most of its recovery since Covid struck.

On balance, the INSEE survey remains weak and French consumers are troubled. There had been some recovery in train, through mid-2024. But since then, the recovery has eroded as the chart at the top of this report shows.

However, perhaps the quick end to the Middle East war and the prospect of less risk to oil markets can help restore confidence. Ukraine’s war with Russia is still in progress. But with the Middle East war stalled- at least for a while, perhaps attention can be shifted to Ukraine with a meaningful positive impact.
by:Robert Brusca
|in:Economy in Brief
Germany| Jun 24 2025
Germany’s IFO Improves
The IFO shows reading that are stronger this month and are showing legacy of being in an upswing – the current index, the climate reading and expectations- all are swinging higher.

Despite the clear turn revealed in the chart, the rankings of the climate, current, and expectations readings remain extremely weak. Among the 18 readings for five sectors and a headline on each of three measures only three of these readings – three of eighteen- have standings as of June at or above their historic median (above a ranking of 50%) back to March 1993.

The climate measure shows a ranking in its 21st percentile in June. That corresponds to a reading of -15.3 in June, an improvement from -16.0 in May. Climate readings improved across all sectors in June except retailing where the climate reading backtracked to -20.3 from -18.6. In terms of the sector percentile standings, only construction has a reading above its median- above a standing at its 50th percentile.

For current conditions, the June measure improved to -3.5 from -3.9 in May. The current ranking is still a weak 13.4 percentile standing. In the current index, the manufacturing and retailing sectors each took a step back in June. Services and wholesaling improved month-to-month. Construction was unchanged in the month. The current readings are much more mixed than for the other two environmental responses in climate and expectations. However, current conditions rank at an extremely weak level of 13.4%. The percentile standings are above the 50% level in construction and in retailing.

Expectations stepped up, improving month-to-month to -9.9 in June from -13.3 in May. Improves swept across sectors only leaving out improvement in retailing where conditions owed to -28.1 in June from -25.1 in May. The service sector reading improves sharply with expectations rising to -3.6 from -10.9. However, all readings under expectations are below their respective historic medians. The strongest reading is 39.2% in construction with the weakest being a 14.7 percentile reading in retailing.

The second ranking column, to the far right, re-ranks all the sectors in the various environments since the Russian invasion of Ukraine. That even took an economy that has been recovering from Covid and took readings down to fresh lows. Looking at valued on that short horizon, expectations have rarely been higher; all expectations are in their respective 90th percentile standing except retailing only in its 80.5 percentile- all of these are strong on this reduced timeline. The climate reading is at its 58.5 percentile overall on this short post invasion timeline with all readings except manufacturing having readings above their 50th percentile. However, the current reading while largely stronger than the full period rankings for ‘current’ really are not that different and note that the current conditions continue to be quite weak even over the shorter horizon.

The bottom line seems to be that expectations are turning higher and the climate has improved but the current situation is changing only slowly. This is a case in which ‘survey type data’ seem to be showing or hinting at improvement in train to a greater extent that current data which should be best reflect in traditional ‘hard data’ reports would lag. It is a cause for optimism.
by:Robert Brusca
|in:Economy in Brief
Global| Jun 23 2025
Flash PMIs Are Mixed
PMI data show broad improvement month-to-month with the manufacturing readings improving in all reporting units except Australia and France.

Service sectors weakened in France, India, and the United States in June.

Only the US and France showed a lower composite index reading in June than in May.

The unweighted composite average of this reporting group of eight shows a steady improvement in the composite from April to May to June. The manufacturing PMI improved from April to May and then held there in June. The average service sector reading improved steadily from April to May to June.

The sequential patterns from 12-months to 6-months to 3- months on hard historic data show that over three months the composite indexes were weaker monthly in four reporting units. Four manufacturing readings were weaker over three months than they were over six months. And six service sectors were weaker over three months compared to six-months.

Over six months six service sector measures weakened compared to their 12-month values. This helped five composite indexes to weaken on the same timeline. Six manufacturing sectors’ gauges improved over six months compared to 12-months.

Compared to 12-months ago, the 12-month average for this month improved for all manufacturing sectors. Three service sectors weakened compared to their averages of 12-months earlier and two composite indicators- in the United Kingdom and in Japan were weaker over 12 months on average than for their average of 12-months ago.

Germany and the EMU show steady improvement in their respective composites over 12 months and for 6-months compared to 12-months and 3-months compared to 6-months. Their manufacturing sectors also were improved on this timeline as was the manufacturing sector in Australia.

No service sector was sequentially stronger in these periods, but the U.K. service sector did get sequentially weaker over 12 months, 6 months, and 3 months.

India and Australia have sector ranking data above their respective medians (ranks of over 50%) for all three sector queue rankings. Japan and Germany each have two sectors ranked above 50%: manufacturing and the composite.

The unweighted average PMI reading from 12-months to 6-months to 3-months shows a relatively flat and stable set of PMI readings while manufacturing PMI readings are improving. But the services readings show a slight deflation in their sequential progression. However, services readings for all horizons show growth, manufacturing shows slight contraction, and composite indexes show modest continuing expansion.
by:Robert Brusca
|in:Economy in Brief
Japan| Jun 20 2025
Japan’s May Inflation Pressure; Inflation Makes a Second Run at Acceleration
Japan’s inflation measures excluding fresh food are showing significant pressure as the ‘all items ex fresh food’ metric soared at a 5.6% annual rate over 3 months while the measure excluding fresh food & energy rose at 3.7% pace over 3 months. The two gauges also rose by 3.7% and 3.3%, respectively, over a span of 12 months. The performance of the measure excluding fresh food & energy sequentially is plotted in the chart. It shows clear ongoing inflation pressure and acceleration.

This, of course, puts the Bank of Japan in a difficult position. Midyear elections are in prospect and sharp rise in rates could prove politically intrusive. At the same time, Japan’s largest trading partner, China, is struggling and its second largest trading parting, the United States, is embroiled in negotiations with Japan over tariffs. There is a great deal of uncertainty for Japan right now surrounding the policy process and that includes a large dose of geopolitical issues.

At the same time, there has been a kerfuffle in Japan’s bond market in the super-long end as purchaser demand has proved less solid and less stable than it was. The BOJ has had a scheduled taper of its purchases in place, one that the BOJ at its last meeting agreed to reduce in order to retain better demand in the long end of the JGB market. However, Japan does face some uncertain times for policy.

The inflation metrics with fresh food show the strongest growth rates for inflation. A traditional core measure that subtracts all food and energy shows less pressure at only 1.5% over 12 months, compared to core readings of 3.3% and 3.7% for the core measures that subtract out fresh food.

Looking across components, among the eight major categories only two have inflation easing over 12 months compared to 12-months ago; those two are ‘education’ where inflation is - and prices- are falling sharply, and ‘reading and recreation’ where inflation is at 2.9% but lower than it was 12-months ago. Over 6 months, only two of five categories show inflation acceleration (compared to the 12-month pace) and the 3-month annualized inflation across categories shows acceleration in half and deceleration in half compared to the paces over 6 months. Only education shows sequential deceleration – where the fall off is sharp. Only housing shows sequential acceleration, and the ramp up there is more moderate.

QTD (quarter-to-date) Quarter-to-data inflation (May & April over the Q1 average then compounded) shows a headline pace at 2%; ‘all items ex fresh food’ inflation is at a 4.7% pace; ‘all items ex fresh food & energy’ is at 3.3%, while the traditional core ‘excluding all food & energy’ is at 1.4%. So, again, we see on the QTD horizon the measures with fresh food subtracted – the BOJ’s preferred gauges- are showing the most pressure. By component, QTD pressure is lodged in ‘reading & recreation’ and in ‘transportation & communication;’ and ‘housing’ (without subtractions) flies below the 2% target at 1.8%.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Jun 18 2025
U.K. Inflation Moderates
Inflation in the United Kingdom measured by the CPI-H measure rose by 0.1% in May as the core excluding energy, food, alcohol, and tobacco also decelerated by increasing 0.1% on the month. These slower May increases follow accelerated increases in April for both the headline and core and more modest increases in March. The sequential growth rates in the headline CPI-H show a gain of 4% over 12 months, a rise at a 4.3% annual rate over 6 months, and a 3.4% annual rate rise over 3 months. The core for the CPI-H shows a 4.2% increase over 12 months, a 4.1% annual rate increase over 6 months and another slight deceleration to 3.6% at an annual rate over 3 months. These data for the headline and the core both show that U.K. inflation has plateaued and begun to edge lower; however, the deceleration is quite slight for both the headline and for the core measures.

Inflation diffusion that measures the breadth of inflation shows a reading of 54.5% over both 12 months and 6 months, with 3-month diffusion much lower at 36.4%. Diffusion readings of 50% show inflation accelerating and decelerating with equal tendencies from period-to-period. Diffusion above 50% shows more accelerating inflation while diffusion below 50% finds more deceleration for inflation. Diffusion readings show that for 3-months compared to 6-months diffusion is significantly lower but that diffusion over 6 months (compared to 12-months) and for 12-months (compared to 12-months ago) is slightly accelerating.

The HICP measure parallels the results for the headline CPI-H with a slight inflation bulge over 6 months and significant slowing of inflation over 3 months. The agreement across the headline, and core CPI-H measures compared to the HICP is reassuring that these trends are true and not simply mercurial or the results of a particular inflation weighting scheme (since CPI-H and HICP use different weights).

Meanwhile unemployment in the U.K. has risen only slightly over the past 12 to 24 months. The recent U.K. monthly GDP reading showed a sharp slowing, but year-over-year growth is still positive headline.

The sequential chart that depicts the growth rates sequentially for timeseries of 3-month, 6-month and 12-month inflation (above) shows that part from a one month slice of those rates (which is what the table provides) the timeseries reveal that the tendency for inflation peaked across these three frequencies back in January and has since been reduced to its lowest pace since October 2024 for both 6-month and 12-month CPI-H core inflation. For the 3-month version, inflation at 3.6% is the slowest since January 2024. Three-month core inflation has slowed without increasing for four months in a row as has 12-month core inflation.
by:Robert Brusca
|in:Economy in Brief
Germany| Jun 17 2025
Germany’s ZEW Survey Respondents Improve Their Assessments
Economic situation- The ZEW index for June 2025 showed significant improvement in the euro area with the index moving up to -30.7 from -42.4 in May. At that level, the queue percentile standing on data back to 1992 is at its 47.5 percentile, close to its median for the period (median occurs at a ranking of 50%). For Germany, there was an improvement from -82 in May to -72 in June; this sets its standing at about its 20th percentile, much weaker than for the euro area overall. For the United States, there was a more modest improvement in June to -17.3 from May’s -25.4; June marks a 25.8 percentile standing, roughly in the lower quartile of its historic queue of data over the last 13 years. Economic assessments for these three reporters range from quite weak to just slightly below ‘normal.’

Macro-expectations- Macroeconomic expectations became sharply stronger for Germany in June; they moved up to a +47.5 reading in June from +25.2 in May, a reading that already had improved from -14 in April. Germany is on a very hot run in terms of expectations that are improving at a much faster pace than the current economic situation. Germany’s macroeconomic expectations have a 72-percentile standing, in the top 30% of their historic queue of data, quite a solid result. This contrasts sharply with the United States where there was also an improvement in June to -41.9 from -48.2 in May. The U.S., like Germany, had undergone a substantial improvement in May compared to April since April's reading had been -71.5. However, the June reading for the U.S. improved month-to-month by only a modest amount and has only an 8.5 percentile standing, the lower 10% of its historic queue of data.

Inflation expectations- Inflation expectations remain weak in the euro area and in Germany in June while they've grown to be quite strong in the United States. Germany saw slight increases in inflation expectations in the month, but they are still at weak levels and the 20- to 25-percentile region on a queue-standing basis. For the U.S., inflation expectations have cooled slightly from a reading of 75.8 in April to 70.7 in May, to 60 in June, a clear de-escalation of inflation expectations; however, still leaving a high 81.1 percentile standing for inflation expectations in the U.S.

Short-term rate expectations- Short-term interest rate expectations in the euro area rose after falling back in May; in the U.S., they edged only slightly higher after also having stepped back in May. However, both the U.S. and the euro area have extremely weak queue standings, both of them in the lower 15-percentile of their respective ranges. Short-term interest rates simply are not expected to rise, and they obviously are more likely to be cut on readings like these.

Long-term rate expectations- Long-term expectations for Germany and the United States show German expectations have waffled, moving from 23.3 in April, down to 6.9 in May and bouncing back to 16.8 in June to produce a queue standing in its 22nd percentile. In the U.S., long-term rate expectations were at 48.5 in April; they fell to 32.1 in May and rebounded to 39.0 in June to reach a queue standing at its 43.6 percentile, slightly below its median standing for the period (remember that median standings occur at a queue percentile standing of 50%).

Stock market outlooks remain weak- Stock market expectations show weak standings everywhere. The euro area saw a marginal technical improvement in June compared to May; Germany saw a small improvement in June compared to May, whereas May had seen a more significant increase compared to April. The U.S. continues to log negative readings for equities. Germany and the euro area show standings for the stock market in their respective 15-percentile ranges, whereas the United States’ reading is in its 7th percentile. All of those readings are weak.
by:Robert Brusca
|in:Economy in Brief
Japan| Jun 12 2025
Japan’s MOF Business Outlook Survey- A Step back But with Optimism
The outlook survey Japan's Ministry of Finance business outlook survey for business conditions among large enterprises registered a decline in the second quarter, posting a -1.9 reading in the current quarter compared to 2.0 in the first quarter and 5.7 in the fourth quarter of 2024. Manufacturing enterprises registered even weaker results with a -4.8 reading in the second quarter, down from -2.4 in the first quarter and compared to +6.3 in the fourth quarter. Even nonmanufacturers in the second quarter logged a negative response at -0.5, compared to +4.1 in the first quarter and +5.4 in the fourth quarter of 2024. These are all responses from large enterprises.

The survey also covers medium and small enterprises; both medium and small enterprises showed negative figures for the second-quarter business conditions. For medium enterprises, the drop was to -0.9 from +0.7 in the first quarter and +3.8 in the fourth quarter. Whereas medium-sized enterprises showed less change with a -12.3 response for the second quarter compared to -12.7 in the first quarter and -4.7 in the fourth quarter. Small enterprises seem to be facing difficulty.

General conditions for the domestic economy in the survey for large enterprises showed a fall off to -6.2 in the second quarter from +3.1 in the first quarter and +4.2 in the fourth quarter. Drop offs were apparent for manufacturing and for nonmanufacturing establishments. Medium-term enterprises showed a similar and sharper drop off and small enterprises saw weakening worsening with the overall negative numbers being posted for the second quarter even weaker than what they registered under business conditions.

On the employment side, large enterprises posted a 26.9 reading in the second quarter, a decrease from the first quarter reading of 28.3, compared to a fourth quarter reading of 27.4. Manufacturers showed flat employment responses; nonmanufacturing enterprises showed weakening responses. Medium and small enterprises both show a pattern of weakening.

The Outlook In addition to the current quarter responses, there are also one- and two-quarter-ahead outlooks provided by the survey. Business conditions for large companies post a +1.5 reading for the quarter ahead and +2.6 for the quarter after that. For medium-sized enterprises, they see a +3.1 reading for the quarter ahead and +3.3 for the quarter after that. Small enterprises log a -5.1 reading for the quarter ahead and -3.8 for the quarter after that.

The readings for the general domestic economy are generally higher than for business conditions for large enterprises. In all cases, the net readings for the general domestic economy for the quarters ahead are better than the assessment for the current quarter (2025-Q2).

One significant caveat here is that the outlook quarter for employment generally shows weaker net readings for the future quarters than for the current quarter -and this is true across the board.

Rankings To understand these assessments better we can look at them as rankings, ranked against their own past responses. The rank standings of the various data across the industry types and various sizes of companies for business conditions shows generally stronger rankings for medium and smaller enterprises than for large ones for the current quarter. Large and medium-sized firms see erosion in conditions looking ahead and farther ahead. But small nonmanufacturing enterprises see conditions firming ahead compared to past responses on this survey.

General domestic economic assessments show weak rankings across the board all below their 50-percentile mark in standing, but all also show improving trends in ranking looking ahead. But the response for small manufacturers even though they obey these same trends, they are extremely weak.

The job market assessments show a rank assessment of 80- and 90- percentile standings across most firms regardless of firm size; the exception is for medium and small manufacturers. But even there while their current quarter standings are below 80%, their outlook remains solid even with a current quarter ranking as low as 41%, small manufacturers get their two quarter ahead employment expectations up into the 80th percentile.
by:Robert Brusca
|in:Economy in Brief
Japan| Jun 11 2025
Japan’s PPI Shows Inflation Slowing
Japan’s PPI in April edged higher, rising by 0.1% month-to-month. For all manufacturing, the PPI stepped back and declined by 0.4% month-to-month. Both of these follow stronger increases in the previous months.

Still, these headline PPI shows a gain of 4.1% over 12 months, an expansion pace of 3.9% annualized over six months and a gain over three months at an annual rate of 3.6%, a steady, but moderate, deceleration for inflation.

Manufacturing prices rose by 2.3% over 12 months and accelerated slightly to an annualized pace of 2.6% over six months before slipping into low gear and rising at just a 1.6% annual rate over three months.

Japan’s CPI also decelerates on this sequential timeline, but with a hump in the middle after accelerating over six months. The U.S. PPI has that same profile. Japan’s core exhibits barebones deceleration; after rising at a 1.6% annual rate over 12 months, it settled into a gain of 1.5% annualized over both three months and six months. Producer prices in the EMU show ongoing declines with a lesser decline over six months, then, a greater pace of decline over three months, at -5.5%.

These comparisons reveal a rather broad-based trend for inflation to ease and weaken, especially over the recent three months.

A big part of inflation going weak over three months is oil prices. Oil prices (Brent) fell by 17.9% in April. They also fell at a 54.4% annual rate over three months, a 25.2% pace over six months, and at 28.2% over 12 months. Falling energy prices, especially if they fall long enough and sharply enough, get into the pricing system and have an impact beyond headline prices. We are seeing that on global basis, right now.

U.S. and EMU PPIs as well as Japan’s PPI and manufacturing prices all show positive correlations ranging from 0.37 to 0.53 with Brent prices with both series expressed as year-on-year percentage changes. Japanese CPI prices, however, show negative correlations between energy prices and headline core inflation rates, -0.15 to -0.37.

One month in the second quarter data show U.S. and PPIs revealing declines in prices along with Japan’s manufacturing price index. In this nascent quarter, Brent prices are edging lower at a 0.2% annualized rate. Still, Japan’s CPI is rising at a 1.4% annual rate and the core at a 1.7% annual rate as Japan’s CPI continues to resist the siren call of lower prices from the Brent index.
by:Robert Brusca
|in:Economy in Brief
Australia| Jun 10 2025
National Australia Bank Survey – One Month Glimmer
The National Australia Bank (NAB) index rose in May after three straight months of declining breaking a string of weakness. However, sequential changes still show declines on balance over 12 months, six months and three months. The level of the current index ranks only in its 32.6 percentile on data back to early 2003. The ranking of the three-month moving average is in its 17.6 percentile and for the 12-month moving average the ranking is in its 20th percentile. The index clearly is weak and it has been weak for a while; however, forward orders suggest that there may be some improvement in train, although that reading too remains with a weak, though improving, ranking.

Bad breadth... The indexes and the components of the Australian index show broad based weakness over three months, six months and 12 months. Over recent months proving characteristics have shifted to be slightly more positive. As in March, 68.8% of the categories showed improvement month-to-month, in April only 18.8% showed monthly improvement while in May over 60% showed improvement. However, the monthly data are in sharp contrast to the sequential data where three-month trends show only 18.8% of the categories improving, only 37.5% improving over six months, and compared to a year ago only 25% are improving. So, the Australian index definitely chronicles a lot more weakness in train despite the fact there may be some hints of improvement or, at least, less weakness, creeping in.

Weak, in a long historic context as well Among the 13 categories in the index, there are only six of them that have queue percentile standings above the 50% mark, a level that indicates they're above their historic medians; three of those firmer observations signal excessive price pressures coming from labor costs, purchase costs, and prices-outright. Interestingly, Australia continues to show exports and export sales as above median despite the hostile global environment with tariffs rising and trade wars threatening Australia also shows an above median reading for capacity utilization.

On balance, the report is not very reassuring although there is an increase in the overall index in May and there are slightly weaker decelerations in the three-month and 12-month moving averages, but those are more cases of less weakness in train than evidence of any outright improvement occurring. The NAB index continues to be a downbeat reading on the Australian business situation although the resilience in the export categories is something of note.
by:Robert Brusca
|in:Economy in Brief
Japan| Jun 09 2025
Economy Watchers See a Glow of Improvement- But Not Much Growth
The economy watchers readings improved broadly, rising month-to-month across 70% of categories in the current index and across all categories in the future index. In sharp contrast, all the current and future readings are lower year-over-year and most of them are lower over six months- all are lower on a six-month average basis- as well as over three months compared to six months.

The month’s strength is widespread as one-month phenomenon, but it clearly comes amid a period when growth has been relentlessly weak. It is not clear that the one-month signal is strong enough to dominate the weak trend.

The levels of the readings are clearly and broadly weak. No future index has a ranking above the 50-percentile mark (above its median) and only one current reading -housing- is above its median, but that is only barely and only for a month and not an average basis.

The future indexes are relatively stronger for corporations, both manufacturing sector and in the nonmanufacturing sector, as well as for eating and drinking places. The services sector has the lowest ratio of the future reading ratio to the current reading.

Despite the ‘pop’ in the reading for this month, the report is hardly upbeat. Japan’s economy seems locked in a weak trend with the current month showing a sigh of life. The question is whether this signal is real and lasting or not. We can’t know that yet.
by:Robert Brusca
|in:Economy in Brief
Germany| Jun 06 2025
German IP Slips
German industrial production (headline series including construction) fell by 1.4% month-to-month in April as a recent see-saw pattern of monthly increases vs. declines is in train back to October. Output declines in the month were distributed across consumer goods, capital goods and intermediate goods.

In addition, construction output fell in April, dropping by 1.5% month-to-month after rising in March and declining in February.

Manufacturing output fell by 1.8% month-to-month in April as real sales also fell by 1.5%, and as real orders for manufactured goods rose in the month by 0.6%.

Sequential trends The sequential trends for IP and its various sectors as well as for orders show unclear trends. Capital goods and intermediate goods show improving trends (from 12-months to 6-months, to 3-months) as output transitions from declines over longer periods to increases over the recent shorter periods. Manufacturing joins that sequence as it also shows a transition from a period of declining output to increases in recent periods. But construction trends remain erratic and the trend for real orders is also chaotic, although it is topped up by a very strong gain over three months. Real sales are on board for the transitional move from declines to sales increases over recent periods. While there is some degree of mixed trends in the data, there are also some traces of an ongoing recovery with improvement in progress. It is still nascent, but the improvement is identifiable and easily recognizable.

Surveys Manufacturing surveys from ZEW, the IFO, and the EU Commission are mixed in their message. The ZEW survey shows a sharp improvement month-to-month. The IFO shows weakening for manufacturing and for manufacturing expectations. The EU commission index shows an improvement month-to-month. Compared to February levels, these same four readings show contrary results. Their sequential signals remain mixed, both in terms of their lack of monotonic signaling as well as in terms of the simpler comparison of the 12-month readings to the 3-month readings. There is simply no clear signal on direction here.

Other Europe Portugal and Norway offer two separate Northern- and South-European signals; both show strongly improving sequential trends. Their month’s performance remains chaotic, but their sequential performance is upward and a clear positive signal.

QTD Quarter-to-date signals (QTD) show mixed results for output-based measures and for real orders in Germany. But the survey data show improvement QTD and the two European readings for Portugal and Norway show gains in progress as well.

Queue standing The queue standing data that ranked performance over a longer profile show most readings with rankings below the 50% mark which in all cases leaves the current reading below its median for this period (data back to 2000), the exceptions with above 50-percentile readings are consumer goods in Germany (54.6%), real manufacturing orders in Germany (66.7%), and Norway (99.6%).

Summing up Despite the month’s step back, there is still evidence that growth and improvement is stirring or trying to stir. Economic performance often is not monotonic and various factors including weather and other unique and temporary factors can interrupt even a solid trend. There is reason to be hopeful that German data still show progress and with the mandate to do more to defend themselves in NATO is also a spur to output we should expect over the coming months.
by:Robert Brusca
|in:Economy in Brief