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| Oct 22 2024
European Car Registrations Rise on Month, Fall Year-on-Year
European vehicle registrations fell by 6% in September, partly unwinding a drop of 9.7% logged in August. Registrations continued to be in a weak patch, falling at a 27% annual rate over three months and acceleration from a 2.9% rate of decline over six months. Over 12 months sales are lower, falling at a 7.7% annual rate. The problem is not just weakness in the month because the data on the three-month moving average show a decline and have fallen for several months in a row; based on three-month moving averages, the three-month 6-month and 12-month moving averages show declines at double-digit rates. Registrations are weak in Europe.

By country, registrations rose in the five countries that report sales: Germany, France, Italy, Spain, and the United Kingdom. Gain to the sharpest in Spain at 14.5% gains were weakest in the U.K. at 3%. Except for the U.K., all these reporting countries showed declines in registrations for two months in a row; the U.K. posted an increase in registrations in July.

Germany shows the weakest progression for registrations among the individual countries although on a year-over-year basis the weakest sales are in France where they fall 12.3%, in Italy where they fall 11%, compared to Germany where registrations year-over-year fall by only 6.7%. The U.K. has registrations up by 0.5% over 12 months while Spain has registrations up by 6.2%.

The progression of sales from 12-months to six-months to three-months shows growth rates in Germany escalating negatively from -6.7% over 12 months to a -20.2% pace over six months to a -56.9% annual rate over three months. This extreme weakness is challenged to some extent by Italy where there's an 11% drop over 12 months, a 3.5% drop, at an annual rate, over six months, and a three-month drop of 38.8% annualized. France shows consistent negative numbers across these horizons, falling by 12.3% over 12 months, a 19.1% annual rate drop over six months and a 14.2% annual rate drop over three months. Spain’s 6.2% year-over-year gain becomes a 17.6% annual rate drop over six months but then recovers to a 17.3% annual rate increase over three months. Spain's data are more volatile than they are weak. The U.K. is the only country to show increases on all horizons; it's showing accelerating increases with a gain of 0.5% over 12 months, progressing to a 2.6% annual rate rise over six months and elevating to an 18.5% annual rate over three months.

The United Kingdom is the only country that has a true positive story to tell. Spain has a story of some volatility with an increase over three months. The other countries have these isolated gains in September that are part of negative progressions. In Europe, conditions are weak; the auto sales data tell us they continue to be weak and there's no evidence that broadly tells us that things are getting better. In fact, the overview seems to be that conditions continue to be quite weak and might be getting worse. European car registration data today are not reassuring.
by:Robert Brusca
|in:Economy in Brief
Germany| Oct 21 2024
Germany’s PPI Runs Slow
The German PPI in September fell by 0.5% as the ex-energy PII fell by 0.1%.

Year-on-year Germany’s PPI fell by 1.4% but the ex-energy PPI rose by 1.3% providing ‘some breathing space’ on the inflation front. The PPI, of course, is not targeted by the ECB nor are any national pricing results. However, Germany is the largest economy in the EMU and its results matter. What we see in the PPI is evidence of better price discipline overall- but overstated in the PPI headline.

Sequentially the German headline PPI gains 0.6% at an annual rate over six months and is flat over three months- compared to its 12-mont drop of 1.4%. The ex-energy PPI rises at a 1.9% annual rate over six months and runs at a 0.7% annual rate over three months. PPI prices are more closely linked to the manufacturing sector when global economic conditions have remained weak.

German sector results show mixed gains/losses from July to September monthly. Sector results taken sequentially show German consumer goods prices (at the PPI level) up by 1.5% over 12 months, gaining at a 1.8% pace over six months and rising at a 0.6% pace over three months. That’s a relatively subdued profile. Investment goods prices rise by 2% over 12 months, rise at a 1.2% annual rate over six months, and tick higher over three months at a 0.3% annual rate. Intermediate goods prices are up by only 0.5% over 12 months, rise at a 1.0% annual rate over six months, and fall at a 1.0% annual rate over three months.

The table shows German CPI prices for comparison. They are closer to the HICP that the ECB targets EMU-wide than the PPI. The profile of headline CPI prices in Germany runs under the EMU 2% target on all three sequential periods. But the CPI excluding energy is hot, running at a pace North of 2% over 12 months, 6 months and 3 months at an annual rate and showing its hottest pace over 3 months.
by:Robert Brusca
|in:Economy in Brief
Japan| Oct 18 2024
Does Japan’s CPI Pave the Way for Opportunistic Normalization?
Japan’s core CPI – the CPI excluding fresh food and energy- rose by 0.2% in September as the headline rate fell by 0.4% - both month-to-month. The measure of all items excluding food and energy rose by 0.1%; prices excluding only fresh food fell by 0.3%.

Year-on-year inflation trends Year-on-year inflation was excessive for the headline at 2.4%, but that was a down-draft from a year-on-year pace of 3.1% from a month-ago. Core inflation settled to target on a 12-month basis as the pace dropped to 2.0% from 2.1% a month ago. Prices less fresh food fell to a 2.4% pace over 12 months from a 2.8% pace a month ago. Prices excluding all food and energy logged a 12-month gain of 1.7%, the same as a month ago. Not surprisingly, different measures show different trends. The headline is a bit hot but the preferred core measure, excluding only fresh food and energy, shows inflation dead-on target. Still, that is not the end of the story.

Inflation risk rises in the core The X-fresh food and energy core (xFFE) is spot-on over 12 months, but that may be a passing fancy. Sequential growth rates for this measure show the xFFE core running at a 2.3% clip over six months and by 3.0% at an annual rate over three months. Inflation may only be transitorily at its 2% target as it builds a head of steam for stronger expansion that, if sustained, would push the core beyond 2%.
by:Robert Brusca
|in:Economy in Brief
Europe| Oct 11 2024
World Money Growth Is Back on Track...Is Inflation Too?
Money growth has turned positive and the main money center areas show net money growth. Money growth is at 1.9% year-over-year in the European Monetary Union, up by 2% in the U.S., up by 1.8% in the U.K., and by 1.3% in Japan. Comparing the 12-month growth rate to the three- and six-month growth rates in all these countries, we see a progression with money growth becoming stronger. The exception to this observation is Japan, where the M2 plus CDs measure grows 1.3% over 12 months and then reduces its pace over three and six months to 0.3% and 0.4% annualized.

In the European Monetary Union, credit growth is consistently positive and accelerating.

The monetary financial side of the ledger is starting to look very positive from the standpoint of creating growth, however, to the extent that it does that it is also being much less of a factor in terms of restraining inflation.

Real money balances Real money balances over 12 months are still declining in the EMU, in the U.S., in the U.K., and in Japan. However, the situation is in flux; over three months, real money balances are growing in the monetary union- and growing fairly strongly in the U.S.; it is advancing in the U.K. Over three months only Japan shows declines in real money balances.

EMU credit growth The European Monetary Union shows real credit growth contracting over 12 months but at growth rates of 1% or less. These negative growth rates are diminishing over three months. Credit to residents and private credit growth are declining at growth rates less than one-half of 1% as real credit in the monetary union begins to head for inflation-adjusted positive growth.

A tailwind for growth—at last? With these changes in the provision of liquidity and the impact on credit growth, nominal and real GDP growth are going to find more of a tailwind… and so will inflation…
by:Robert Brusca
|in:Economy in Brief
Europe| Oct 10 2024
IP Struggles in EMU
Manufacturing output in the European Monetary Union (EMU) continues to show countries struggling to make sustained gains. In the table, EMU members are early reporters of IP data. Manufacturing statistics in August show five of those thirteen countries have declining output. In July, six of them showed declines; in June, five showed declines. Slightly more than half of the reporters do show increases on a month-to-month basis. But the margin between the number with output increasing and decreasing is not impressive. The median increase among these members in August shows IP up by 0.2%, in July the median increase was 0.4%, the same as in June. Despite the mixed nature of these statistics, the median on balance shows consistent monthly increases in output in June, July, and August. However, over these same months, the proportion of reporters showing output accelerating is generally disappointing. In June about 54% of the reporters show output accelerating, in July that fell back to 38.5%, in August that proportion improved only slightly to 41.7%. In each of the last two months, fewer than half of the reporters were showing an acceleration in output.

Sequential data details Sequential data that look at these same countries’ annualized output growth over 12 months, six months and three months show more seriously mixed and weak economic conditions. Over three months, seven of the thirteen reporters show declines in output. Over six months, eight reporters show a decline in output, and over 12 months, seven of the reporters show a decline in output. Once again, the split between the number of countries reporting output increases and decreases is only a narrow margin, but on these horizons, there are slightly more countries reporting declines than increases.

Sequential trends Not surprisingly, the sequential data show median output changes with declines. Over 12 months, the median decline rate is -0.7%, over six months it's almost the same, at -0.6%, but over three months the output decline worsens to -4.1%. These are all based on data surveyed at an annual rate. If we look at the underlying trend for output over 12 months, 75% of the reporters show output accelerating, but over six months only 33.3% show output accelerating, and over three months only 45.5% show output accelerating.

The bottom line for manufacturing output in the EMU is that monthly conditions are mixed, and the broader sequential data are showing more weakness and more of a tendency to weakness.

Quarter-to-date The quarter-to-date shows seven monetary union economies with output declining; this is two-months into the third quarter. There is some strength, but the strongest reporter is Ireland where output data are notoriously volatile; still in the quarter-to-date, Irish output is up at a 50% annual rate; output in Finland shows a 14% annual rate increase; Belgium shows about a 13% annual rate increase. Those are encouraging numbers; however, on the negative side, there are double-digit growth rates posted by Luxembourg, Malta, Greece, and Portugal. For the most part, these are small or middle-sized European economies, but Europe's largest economy, Germany also shows a quarter-to-date decline in output at a 7% annual rate, with Italy, the 3rd largest economy, showing a 6.7% decline in output at an annual rate. Spain in the EMU’s 4th largest economy; it shows output declining at a 7.5% annual rate. Among the big four European economies, only France with output up at a 1.6% annual rate has an increase in the quarter-to-date.

IP growth is undernourished Growth rates for industrial production are generally below par with the average growth rate; on data back to 2006 at the average percentile rank standing for output growth across these countries is 39.5%. That compares to a median ranking at a 42-percentile standing. Both these calculations show that the average or median growth rate for these 13 countries is weak. The representative growth rate for this group is below the countries’ respective medians for the period. In August, only Belgium, Malta, Ireland, and Greece have percentile standings for their growth rates year-over-year that are in excess of the ranking of 50% putting them above their historic medians. By comparison, the BIG-4 economies in the monetary union show growth rates that rank much weaker in their historic profiles. Listed by the relative size of their economies, Germany has a growth rate with a 20.5 percentile standing, France has a growth rate with a 43.3 percentile standing, Italy has a growth rate with a 15.6 percentile standing and Spain has a growth rate with a 25.4 percentile standing. The BIG-4 economies are relatively much weaker than the rest of the monetary union.

Momentum In terms of momentum, the large economies are split with Germany showing an acceleration in output culminating in a growth rate of 7.9% at an annual rate over three months. France shows the same tendency with weak growth rates over six months and 12 months progressing to a 10.4% annual rate of growth over three months. Italy, however, shows slippage with growth rates that are negative on all horizons and with the largest negative growth rate at -7.7% over three months. Spain also shows a progression towards weakness. Spain's progression is severe with output falling 3.7% over 12 months, falling at a 19.4% annual rate over six months and plunging at a 27.1% annual rate over three months.

Conditions in the monetary union remain mixed with a clear tilt toward weakness and with countries generally showing manufacturing sectors that are producing weaker than average results compared to historic performance.
by:Robert Brusca
|in:Economy in Brief
Japan| Oct 09 2024
Japan’s Economy Watchers Index Takes a Step Back
Japan's economy watchers index took a step back in September after rising in August. The step back takes the September level down to just a few ticks above its value in July. The future index for the economy watchers survey also edged lower, although not as definitively as the current index; it fell to 49.7 in September from 50.3 in August, still above its July value by more than a point. Ranked on data back to 2002, the current economy watchers index has a queue standing in its 53rd percentile, putting it just slightly above its median for that period. The median on ranked data occurs at a ranking of 50%. The future index is slightly stronger with a ranking on the same timeline at about its 59th percentile.

Performance overview Both the current and the future indexes show widespread declines in diffusion values in September compared to August. In the current index, only the rating for eating and drinking establishments shows improvement in September; for the future index there are increases in the services index and in the reading for overall employment. Both the current and the future indexes are below the 50 threshold, which on the diffusion index implies a decline in activity. Looking at components, the current index has only one value - that for eating and drinking establishments - above 50 and has a reading for nonmanufacturing establishments exactly at 50. For the future index, the services reading has a diffusion value above 50 along with employment index and eating and drinking establishments; the reading for manufacturers is at 50.1, barely above 50.

Changes in index values; momentum Looking at changes in the current and future indexes over three months, six months and 12 months, both surveys show improvements over three months preceded by net declines over six months and over 12 months. The current index shows a continuous decline over three months, six months and 12 months for the retail sector, as well as for services. In contrast, it shows steady improvements over three months, six months and 12 months in manufacturing. The future index does not show any steady stream of sequential deterioration; however, it shows steady improvement with gains on all three horizons for services, for manufacturing firms, and for employment conditions.

Reading level evaluations Current- The queue percentile readings calculated on data back to 2002 show the current index at a standing of 53 percentile, above its historic median; however, there are below median readings in retailing and services and for employment - with employment having a particularly worrisome, weak standing in its 29th percentile. That means that the employment reading has been weaker than this, only about 29% of the time. In terms of strong standings, only eating and drinking establishments have a standing above the 80th percentile with an 87.7 percentile standing.

Future- By comparison, the future index has a stronger headline standing at 58.9 percentile and has two component readings with standings in their 80th percentiles for eating and drinking establishments and for services. The future index has two relatively weak readings that are below their 50th percentile mark; those are for housing and for employment. The housing standing is in its 34th percentile, a relatively weak standing; employment doesn't do much better with a standing at the 43.9 percentile.

A difficult employment scenario Employment scores out as weak in both the current and in the future standings although the future metrics show that employment has been improving over three months, six months and 12 months; in the current survey, employment only improves on balance over three months. Moreover, in the current survey the employment diffusion index falls by nearly a point month-to-month, while in the future survey the employment reading gains by nearly a point.

Summing up The economy watchers index shows a relatively broad weakening for conditions in September. While the economy watcher indexes continue to log levels above their historic medians, both the future and the current standings are showing some degree of decline in activity in September. Manufacturing tends to be a bellwether industry for Japan; it shows consistent improvement over 12 months, six months and three months in the current survey as well as in the future survey And manufacturing has above-median standings in both surveys although the standings are particularly strong; on the future reading has a diffusion value above 50. Because of the declines in September, we have to mark the survey overall as disappointing; however, there are some positive aspects in the report, particularly for the manufacturing sector.
by:Robert Brusca
|in:Economy in Brief
Germany| Oct 08 2024
German Output Pops in August
Industrial output in Germany rose by 2.9% in August compared to July; consumer goods output was flat, capital goods output surged by 6.9%, while the output of intermediate goods ticked up by 0.1%. The gain in output clearly is being carried by capital goods in August reflecting that sector’s turnaround from a sharp drop in July.

Monthly patterns The monthly output figures for July show that German output fell in all major categories a month ago, so the August report is substantially a rebound report. However, in June output was broadly higher as it rose in all categories except for consumer goods output, where it fell by 0.9% on the month.

Manufacturing and industry: Sequential growth in output Sequential growth rates show headline output in Germany on the road to repair; while the road may not be long, it still is winding. Industrial output fell by 2.5% over 12 months. That led to a 3.5% annual rate drop over six months as the sector weakened further, but then it jumped to a 6.7% annual rate increase over three months. Over the same sequence of months, the output of consumer goods drops at progressively faster growth rates. On the other hand, capital goods show acceleration and progress on this same timeline; after falling by 1.1% over 12 months, capital goods output rises by 2.4% at an annual rate over six months, and then explodes at a 23.9% annual rate over three months. Intermediate goods output declines over all horizons, dropping by 5.6% over 12 months, dropping even faster at a 7.5% annual rate over six months, then trimming the decline pace to minus 2.8% over three months.

Construction Construction also shows an uneven path with output dropping in August and in July and with sequential growth rates for construction falling over six months and 12 months but then eking out a small gain over three months.

Industrial surveys Industrial surveys for Germany show slowing. These gauges in August compared to July are weaker across the broad. The August values are also weaker than their June values. Sequential averages of these industrial surveys show some creeping improvement in the ZEW survey, little change in the IFO manufacturing survey, some small tendency for improvement in IFO manufacturing expectations, while the EU Commission industrial index for Germany progressively weakens from its averages over 12-months to six-months to three-months.

Other Europe (Four early reporters) Industrial output in four other early reporting European countries shows increases in output for France and Portugal, contrasted to declines for Spain and Norway. None of these countries have two months in a row of output gains or output declines in August or July. June is another month in which output increases in two of them and decreases in two others. The recent monthly readings of output in Europe have been uneven. Sequential calculations for output in these countries shows manufacturing staggering towards better days in France where output posts a 10.4% annual rate increase over three months, following weak and uneven performance over six months and 12 months. Spain shows clear progressive deterioration with output moving from a 3.7% decline over 12 months to a 19.4% annual rate decline over six months to a 27.1% annual rate decline over three months. Portugal follows that progression but with negative growth rates that are about half of the ones posted by Spain. Contrarily, Norway shows progressive acceleration from their 3% growth over 12 months to a 9.1% annual rate increase over six months, and to a 12% annual rate increase over three months.

Quarter-to-date With all the monthly volatility, the quarter-to-date progress is not a given. It turns out to be negative for overall industrial production in Germany as well as for all three major sectors and construction. Real manufacturing orders are increasing in the quarter, despite falling in August; they are rising at an annualized quarterly rate of 16.9%. Real manufacturing sales, however, make a gain in August after declines in June and July but log a 6.6% annual rate decline in the quarter to date. The four industrial surveys for Germany show declines in the quarter-to-date compared to the previous quarter for three of the four metrics. Industrial output in the four other early reporting European countries shows exactly what you would expect: two increases versus 2 declines among the four reporters.

Queue standings over 24 years The queue standings that rank either growth rates or survey levels over the last 24 years shows rankings up and down the line regardless of whether it's a growth rate or a survey value compared to its history with rankings under 50%- with one exception. Industrial production in Norway has the year-over-year growth rate that ranks in the 70th percentile (the top 30% of all its historic growth rates). However, apart from Norway, the strongest rankings in the table are for industrial production in France with a 45.9 percentile standing, and in Portugal with a 43.4 percentile standing. For Germany, the strongest sector growth rate as a standing in the 29th percentile and that's for capital goods output. German real manufacturing orders have a 23.3 percentile standing, real sales in manufacturing have a 17.4 percentile standing, ranked on the level of their surveys in August. The various 4 surveys in the table have rankings that range from a high of 14.2% for the ZEW current index to 4.9% for IFO manufacturing output.

Summing up Despite a nice bump up in output in August, there is little here to bend trends higher or buoy expectations. Output growth and industrial rankings are still weak. European countries are mired in the same weakness as Germany. Conditions remain touch and go in an environment with a deteriorating geopolitical background and lingering inflation that is keeping central bankers wary, and for a time, back on the sidelines on hold despite being in easing cycles.
by:Robert Brusca
|in:Economy in Brief
Germany| Oct 07 2024
German Orders Sink
German orders fell by 5.8% in August as foreign orders fell by 2.2% and domestic orders plunged by 10.9%. This weakness offsets a period of strength in July and June in which total orders had risen 3.9% and 4.6% in respective months, and in which foreign orders had risen by 5.2% and 1.4%, while domestic orders had risen by 2.2% in July and by 9.1% in June. The sizeable declines in August nullify or substantially blunt the strength in orders seen in the previous two months. Domestic orders measured year-over-year in July mark their first increase since February 2022; however, that gain is now gone and turned to a year-on-year drop in August. Foreign orders have had more episodes of showing gains year-over-year; they too showed a year-over-year gain in July, but in August that's also gone. However, foreign orders also showed a year-over-year gain in April of this year, and in March, and in December of last year. Year-over-year gains are not so unusual for foreign orders; however, gains have been very scarce for domestic orders.

Order trend- The trend for German orders is positive overall with a three-month growth rate of 9.6% up from -1.9% over six months and that's up from -4% over 12 months; the progression is a reassuring acceleration. However, the monthly detail and pattern of how this progression has been created is not so reassuring. Foreign orders are the driving force behind this improvement with a three-month real order growth rate at an 18.4% annual rate, up from 1.9% annual growth over six months, and that's up from a decline of 1.3% over 12 months. There is also progress in terms of domestic orders, but it's much less robust. Over three months domestic orders fall at a 2.5% annual rate; that's less than a 6.9% annual rate fall over six months which is less than an 8% drop over 12 months. It is a progression toward improvement, but these are all negative numbers.

Sales trends- Trends for real sales show mixed results in August compared to July. Over three months manufacturing shows a gain in real sales at a 0.4% annual rate; that's up from a 3.2% annual rate decline over six months, but the six-month decline was slightly worse than a 3.1% annual rate drop over 12 months. There's only a hint of better sales based on real sales trends; looking at sector data is not terribly rewarding either.

Industrial surveys- industrial gauges for Germany, France, Italy, and Spain all show negative readings in August. For Germany and Italy the negative readings worsen while for France and Spain the negative readings slightly improve month-to-month. There was also split performance in July between these four countries in terms of improvement or deterioration.

Quarter to date- Quarter-to-date trends show strong results for German orders overall, but these are supported by a tenuous monthly pattern that has the strength mostly back-loaded in June, and to some extent, in July as August parades significant weakness. Quarter-to-date German real orders are growing at a 16.9% annual rate, foreign real orders are up at a 20.4% annual rate, domestic real orders are up at a 12.5% annual rate. In the same quarter-to-date period, real sales overall, as well as by sector, produce negative numbers for growth.

Industrial data queue standings- The queue standings for the industrial data show Germany and Italy with extreme weakness as exhibited in their low standings on ranked data back to 1990. Both France and Spain have rankings just short of the 60-percentile mark, for each; it’s a reading above their respective median, but still a moderate reading- not a strong one.

Summing up The August orders report for Germany unravels what had been an improving trend. While real sales showed a rebound in August, it was not enough to create a solid uptrend for momentum. In the rest of Europe, industrial indicators rank from moderate to very weak. The German industrial picture remains soured while Europe shows no sign of breaking out of its industrial torpor.
by:Robert Brusca
|in:Economy in Brief
France| Oct 04 2024
French IP Ignites for a Month
French industrial output rose sharply in August, a gain of 1.6% after declining by 0.2% in July. Output in August was led by consumer goods; nondurable goods output increased 4.2% month-to-month in August while consumer durable goods output increased by 3% month-to-month. Output of capital goods was also strong during the month, with a 1.6% gain, although intermediate goods output continued to be weak, falling by 0.4% in August and dropping for the second month in a row.

Sequentially French output explodes over three months although it's relatively mild mannered over 12 months and over six months. The strength in French output is relatively recent. Manufacturing output gains 0.3% over 12 months; over six months it is falling at a 0.5% annual rate but that transforms into a 31.1% annual rate over three months as output sharply recovered in June and in August.

Sequential growth for MFG components Components find consumer durable goods output falling by 6.3% over 12 months, gaining at a 4% annual rate over six months then rising at a strong 14.9% annual rate over three months showing steady acceleration. Consumer nondurable goods output rises by 5.9% over 12 months; output slows to gain at a 4.3% annual rate over six months then it expands sharply to grow at a 19% annual rate over three months. French capital goods output is up only 0.3% over 12 months, but it then expands at a 1.5% annual rate over six months and gains at a 14.2% annual rate over three months showing steadily accelerating growth on this time sequence. Intermediate goods output falls by 3.4% over 12 months, falls more sharply, at a 6.6% annual rate over six months, then cuts that weakness to only a 0.2% annual rate drop over three months.

Quarter-to-date With two months into the third quarter, manufacturing output is rising at 1.6% annual rate, with consumer nondurable output up at a 7% annual rate and consumer durable goods output up at a 3.8% annual rate. Capital goods output is up at a 4.3% annual rate; intermediate goods output is falling at a 5% annual rate in the quarter-to-date.

During this period when output has been experiencing some mild increases, they have transformed into strong increases over three months. Yet, motor vehicle registrations have been consistently weak. That important big ticket consumer item has not taken off.
by:Robert Brusca
|in:Economy in Brief
Global| Oct 03 2024
S&P Composite PMIs Weaken in September
It has been a weak month for the S&P PMI readings. S&P previously reported manufacturing’s slide lower and with the services PMIs now engaged in a general topping formation and easing this month the composite PMI is continuing to slide and currently is embraced in a downtrend.

September assessments The sample of 25 countries that report PMI data show 13 of these reporters with composite PMI values below 50 that indicates an economic contraction since the composite is a comprehensive score.

76% of the reporters in September showed a slowing month-to-month; that is a decline in the PMI value compared to the month before. This compares to 20% slowing in August which had been a month of some improvement; however, August compared to July when 60% of the reporters had weakened month-to-month. And so, the data see-saw goes.

The unweighted average of the PMI readings among the 25 reporters in September is down to 51.5 from 52.4 in August; the 51.5 average is below the 51.7 average for July. The median reading for September slips more sharply to 49.8 from 52.5 in August whereas August had been an improvement from 51.3 in July. Of course, the September value at 49.8 is below the July value as well. While the average score in September shows a slight expansion at a PMI average of 51.5, the median shows there is a slight contraction in place at a median value of 49.8.

Sequential patterns The sequential readings are based on the average observations over three months, six months, and 12 months. Very little changes looking at either the average or the median metrics on these horizons. The average readings over these 3 periods have clustered around or just below the diffusion value of 52 while the median readings have clustered about a point lower around the median reading of 51; but both have been very consistent around these markers with no indication of anything that we could call a trend change. Over these periods, the number of reporters with diffusion below value of 50 which indicates contraction has been at six to seven members for 12-months, six-months and three-months. These sequential statistics also show that the proportion slowing over 12 months compared to 12 months ago is 56.5%, just slightly above half. Over six months, about 34.8% are slowing compared to their 12-month average, representing about 1/3 of the reporters. However, over the recent three months, the proportion slowing compared to six-month values is up closer to 2/3 of the reporters.

Standings The queue percentile standings which are presented in the final column give us the rankings of the level of the PMI readings since January 2020. The average ranking has been at its 43rd percentile while the median ranking has been at its 38th percentile. Both aggregate statistics, of course, are weak. Since we're looking at percentile standings, the median for any member in the group would occur at a 50-percentile standing. We can see that by a large margin the prototypical reporter is below its median, below the 50% standing mark. Only six members have rankings above their 50th percentile mark. Those are Egypt, with a 66-percentile standing, Japan, with a 71-percentile standing, Singapore, with an 80th percentile standing, Spain with an 80th percentile standing, and India & Brazil both with 84-percentile standings. Similarly, there are six members with percentile standings below the 25th percentile mark.

Conclusion: The clear conclusion from this is that the global economy remains weak and it's clear from the graphic above that we have weakness in manufacturing and in services although on the data back to 2021 quite clearly the manufacturing sector is relatively much weaker while the services sector has fared better despite its recent weakness. Still, both these sectors are undergoing downward pressure currently even though central banks engaged in easing patterns. Those easing patterns have been either put on hold or slowed given the reality of inflation that continues to run above targets that central banks have set.

Trends for the Better vs. Worse Worse- The grey backgrounds in the table identify countries where there has been persistent weakness over the designated periods with PMI reading below 50. For sequential data, there has been persistent contraction over three months, six months, and 12 months in Germany, France, Hong Kong, Zambia, Egypt, and Kenya. Over the most recent three-month period, there is persistent month-to-month contraction in each of these months in Germany, Hong Kong, Zambia, and Nigeria.

Better- Only Brazil and Egypt show progression of better readings over 12 months, six months, and three months; however, for Egypt the readings have remained below 50 indicating contraction. Conditions are persistently worsening for oil producers Saudi Arabia and United Arab Emirates, as well as in Zambia, Ghana, and Nigeria. That list is weighted to all producers and less developed economies and focuses attention on how the rest of the world is eager to see the money center economies continue their progression to cut rates to provide relief to these peripheral areas.
by:Robert Brusca
|in:Economy in Brief
Europe| Oct 02 2024
Unemployment Realities Strike in EMU
There is still a great deal of growth pessimism about prospects in Europe. The August unemployment data, however, make it unquestionably clear that the labor market continues to perform quite well. The unemployment rate in August for the European Monetary Union (EMU) stood at 6.4%, same as its level in July. The unemployment rate continues to sit at its historic low.

Still more unemployment progress that regress Scanning the unemployment rates for 12 of the longest standing European Monetary Union members as of August, unemployment rates month-to-month fell in six of them, while unemployment rates rose in only three of them. Labor market progress is still more widespread than labor market backtracking in the European Monetary Union. Unemployment rates in August fell in Finland, Italy, Spain, Ireland, Greece, and Portugal. Unemployment rates rose in August in Austria, Luxembourg, and the Netherlands. EMU-wide the number unemployed continues to fall.

We can also rank unemployment rates in their historic queue of data back to 1994. On this basis among the 12 monetary union members in the table, only two of them are above their historic medians. The medians in terms of ranked data occur at the 50th percentile mark. Luxembourg has an unemployment rate that ranks in its 85.5 percentile; Austria has an unemployment rate that ranks in its 60.5 percentile. All the rest of the country-level unemployment rates rank below their 50th percentile, with the highest ranking among the remaining countries being Finland where the unemployment rate stands at its 39th percentile, still well below its historic median. Germany, that has been in the news for unemployment slippage and economic weakening, has a 19.5% ranking in its unemployment rate – that is in the bottom 20-percentile of its historic queue of ranked data. The bottom line for the European Monetary Union is that the labor market is still quite solid and although there are concerns about weakness and perhaps concerns that the European Central Bank needs to cut interest rates more rapidly, the ECB is paying attention to inflation being over the top of its 2% target and at the same time it is looking at unemployment in the EMU that is tied for its all-time record low rate since the monetary union was formed.
by:Robert Brusca
|in:Economy in Brief
Japan| Oct 01 2024
Tankan Shows Steady MFG Reading in Q3
Japan’s Tankan for 2024-Q3 scored a +13.0 for large manufacturing firms, the same as in Q2. Large manufacturing firms are the bellwether reading for this survey. However, there also was an improvement for nonmanufacturing firms in Q3.

There is also a look ahead reading for Q4 in the survey. Again, on this basis, the large manufacturers log a reading of +14, the same as in Q3. Nonmanufacturers show a one-point improvement in their outlook.

The percentile standing data show large manufacturers have a 69.3 percentile standing in Q3. Nonmanufacturing firms are stronger with a 98.7 percentile standing. The outlook shows manufacturing firms at a 76-percentile standing with nonmanufacturing firms at a 100% percentile range standing – at their strongest standing on data back to 2006.

Across the various detailed nonmanufacturing sectors, six of these sectors have rankings in their 90th percentile. The sector, taken as a whole, has a 97.1 percentile standing. Personal services have a ranking only in its 50.7 percentile. Construction has a 65.3 percentile standing.

None of the Tankan sector readings are weak. The industry series are essentially at their medians or better- personal services is essentially a median reading. All nonmanufacturing industries except wholesaling and personal services are above their respective one-year averages. Manufacturing also is above its one-year average.
by:Robert Brusca
|in:Economy in Brief