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

Ireland| Jan 17 2023
Irish Inflation Surges Then Lingers
The HICP inflation rate in Ireland fell by 0.3% in December after rising 0.3% in November and gaining 1.5% in October. The domestic CPI index followed the same pattern except for the gain of 1.8% in October. The domestic CPI index for the core showed a 0.3% gain in December, a 0.5% gain in November and a 0.5% gain in October. While there's some evidence of a break in inflation in October, the drop hasn't been enough to reduce the pace of inflation although the more moderate seeming consistent increases in the rate of inflation on the CPI core shows some very modest deceleration over three months.

The trends: The sequential inflation rates from 12-months to six-months to three-months show the HICP total inflation rate at 8.2% over 12 months, falling back to a 4.7% pace over six months, then reaccelerating to a 5.7% pace over three months. There is a net reduction from 12-months to three-months. The domestic measure of inflation is quite similar with an 8.1% 12-month gain, a moderate 5.2% six-month gain and an annual rate expansion of 7.2% over three months that is only slightly weaker than the 12-month pace of 8.1%. The domestic core CPI grows at a 5.4% annual rate over 12 months and over six months and then decelerates to a 4.8% annual pace over three months. There is some true deceleration in the core. On the other hand, it's small following only by six-tenths of one percent on an annualized three-month inflation rate.

Inflation’s breadth: Looking at inflation diffusion, we see that the inflation rate for 12-months compared to the 12-month period of one-year ago has a diffusion reading of 58.3, which indicates that inflation was rising in more sectors than it was falling since the diffusion index is above 50 (above 50%). However, over six months the diffusion index is at 41.7%, indicating deceleration because inflation is lower over six months compared to 12 months across more than half the CPI categories. Over three months there's a further step down and the diffusion index falls to 25%; this reading shows that across the various categories, inflation was rising in three-months compared to six-months in only 25% of categories.

Breadth vs. the headline and core metrics: While inflation itself has not changed very much and while its deceleration on the three-month pace compared to the 12-month pace is somewhat uneven across the headline and core measures, the breadth of the fall across CPI categories is relatively wide. The reason that headline inflation doesn't fall as much as the breath statistics seem to indicate has to do with the weighting of the CPI. Those components that are showing acceleration have larger weights than those that are showing deceleration; therefore, a broader-looking deceleration measure is not to reflected the headline or core as much. Still, this is solid evidence that inflation is being tamed; that monetary policy is having an impact.

And in the quarter to date, which is now a complete statistic for the fourth quarter compared to the third quarter, we see the inflation metrics are still relatively high. The HICP total inflation rate is at 7.2%. The domestic headline inflation rate is at 8.5% and the core inflation rate is at 4.6% - all are ‘too-high.’
by:Robert Brusca
|in:Economy in Brief
Europe| Jan 16 2023
EMU Deficit Lingers But Narrows As Imports Slow Sharply
The trade deficit for the European Monetary Union (EMU) in November contracted sharply to €15.2 billion from €28.1 billion in October. Over three months the deficit averages €26.6 billion, over six months €33.0 billion, over 12 months the deficit is €26.5 billion. One year ago, the monthly trade balance was in surplus for the 12-month average with a surplus on the order of nearly €12.7 billion.

What went wrong…(what’s going wrong) There are two prongs in this fork in the road as it takes the European Monetary Union from being in surplus on balance in 2021 to being in significant deficit today. The first item, and the one of lesser importance, is the balance on manufacturing trade. In November, this is in surplus with manufacturing trade logging a premium of exports over imports of €31.1 billion; that's sharply higher than the October surplus of €23.8 billion. Over three months, the surplus averages €26.7 billion, over six months it's €22.3 billion, and over 12 months it's €22.2 billion. One year ago, the 12-month average of monthly surpluses was €30.2 billion. There's been a steady slippage in the surplus for manufacturing trade since that; it has just started to reverse as the surplus in manufacturing is back up this month.

The second prong of deterioration is the balance on nonmanufacturing trade, and this is where the deterioration has been the most dramatic; it is mostly because of the rise in commodity prices. But with commodity prices now softening, we see a reversal in the deterioration here as well. Nonmanufacturing trade is in deficit in November to the tune of €46.4 billion; that's lower than October's €51.9 billion deficit. Over three months the nonmanufacturers deficit is at €53.3 billion; that's down slightly from €55.3 billion over six months but up from a deficit of €48.7 billion over 12 months. One year ago, the 12-month average of the monthly deficit was at €17.5 billion. Nonmanufacturing trade has chronically been in deficit in the EMU, but the deficit, traditionally, has been offset by the surplus in manufacturing trade. Over the last year, there has been some further deterioration that is now in flux, but the big shift is in the average for 2022 compared to 2021. The deficit in nonmanufacturing trade has ballooned sharply over the last 12 months as the surplus in manufacturing trade has withered and this has caused the widening gap in the balance of trade by the European Monetary Union. But recent data show how a reversal of that trend is in progress.

Trends in percentage terms… These values in euros have corresponding percentage trends. Looking at the percentage trends we can see that the worm is starting to turn because of growing import weakness as exports do a better job of holding their own…

For manufacturing exports, the year-on-year gain is nearly 16%. Over six months it's at an annualized game of 11%; over three months that gain is holding around the 11% pace. The pace of exports in manufacturing is slipping, but only slightly. For nonmanufacturing exports, the pace over 12 months is 22.4%. Over six months that sags to a decline at a 5% pace, but then, over three months, the pace is at steadies at -4% annualized.

EMU imports show manufacturing imports up 14% over 12 months. For six months imports fall at a pace of 1.5%, but then, over three months, imports fall at an 18% annual rate. Nonmanufacturing trade shows imports up 36% over 12 months. Over six months this reverses to log a decline at a 6% annualized rate, then, that pace decelerates sharply to a -48% annualized rate over three months. This is for imports into the European Monetary Union area from outside countries and includes a good deal of energy imports where prices are falling.

Trade flows in the European Monetary Union are slowing down and they're slowing down dramatically. They're slowing slightly for manufacturing exports, more for nonmanufacturing exports, they're slowing significantly for manufacturing imports and they're slowing dramatically for nonmanufacturing imports where commodity prices particularly for energy have broken.

EMU Members and Other Europe Turning attention to individual countries we see some slightly different patterns in German exports that have held up more steadily rising 14% over 12 months, gain to a 21% pace over six months, then settle back to a 15.5% pace over three months. This compares to German imports where the gains are nearly 30% over 12 months, accelerate to 33.5% over six months, and then decelerate sharply to about 6% over three months.

France shows some similar trends with exports up 16% over 12-months slowing to an 11% pace over 6-months and then falling at a 9% annual rate over 3-months. Imports also show deceleration, rising 19% over 12-months, gaining at a 10% pace over 6-months, then falling sharply at a 20% annual rate over 3-months.

The United Kingdom, a European country outside of the European Union, shows its exports up 29% over 12 months, slowing slightly to a 25% pace over six months then falling at a 13% annual rate over three months. U.K. imports follow the same trajectory only slightly magnified with the 22% gain over 12 months, a 7% annual rate fall over six months and a sizable 27% annual rate fall over three months.

In all cases, we see imports are slowing down. Imports are contracting over three months in France and the U.K. but just crawling at a slower pace in Germany. German imports grow on all horizons, and they decelerate over six months; they're relatively flat over 12 months whereas, in France and in the U.K., exports clearly decelerate and then decline sharply over the recent three-month period.

In other Europe- Finland and Portugal, show export flows rising over 12 months, decelerating and declining at about a 15% annual rate over six months. Portugal shows a 10.6% annual rate drop over three months. Finland shows a 23.3% annual rate drop over three months. Weakening trends are everywhere.

Clear weakening trends…crystal The data are clear and indicative of a broad economic slowing. Both exports and imports have been pulled under the spell of deceleration. Exports are somewhat more diffused because they go to different countries, and they spread to areas according to different weights and trade patterns across the countries. Export performance can be fairly varied for this reason. Still, we see a great deal of consistency in the patterns with only Germany showing some export resilience. On the import side, of course, imports are tied very strongly to domestic GDP growth. We see sharply weaker negative numbers in France and in the U.K. suggesting that domestic demand has declined abruptly. In Germany, while imports grow at a 6% (nominal) growth rate, that is much weaker than the 30% posted over three and six months so that the trend also indicates a substantial slowdown and domestic demand weakness, but perhaps not the same degree of weakness that we see in France and in the U.K.

In the European Monetary Union overall, we can gauge domestic demand a little bit better by looking at manufacturing trends since the price element will have a slightly lesser weight in those flows than in nonmanufacturing flows where commodities are involved. There, we see a reduction in the growth rate of imports from about 14% over 12 months, to a drop at an 18% annualized rate over three months; we see a decline of 3.1% in the month of November compared to a rise of 0.1% in October. Slowing domestic demand is evident (mixed in with weakening prices) for the European Monetary Union where the demand slowdown for the union as a whole is like the experience of France. Demand is weakening, and we can see that in the PMI surveys that have shown encroaching weakness and both the goods and services sectors. Note that EMU and member import and export statistics are different. EMU trade is only for trade between EMU members vs. non-EMU members- that nets out intra-union trade among members that national statistics include as ‘exports’ and as ‘imports.’ This data quirk could understate the weakness in EMU domestic demand, since developed economies seem to be weakening faster than developing economies.
by:Robert Brusca
|in:Economy in Brief
Japan| Jan 11 2023
Japanese Surveys Show a Continued Struggle for Growth
Japan's surveys continue to show a struggle for growth. The Economy Watchers Index for November weakened to 48.1 from 49.9 in October; it has risen from its August low. However, the last four months show readings below 50 which indicate contraction. Similarly, the Teikoku indexes show all sectors with diffusion readings below 50 although sectors evidence a minor bounce in November compared to October. The METI index for industry shows a modest drop in November to 95.2 from 95.3 in October and that is part of an ongoing trend of weakness. The LEI for Japan fell to 97.6 in November from 98.6 in October and is on a declining trend.

Economy Watchers Current: These metrics uniformly show Japan with already weak again our performance is sliding into a period where growth appears to be weaker. The Economy Watchers Index fell in the month as the retail sector dropped to 46.6 in November from 48.8 in October. The eating & drinking sector, which had shown some promise in October as it rose to 61, plunged back to 47.9 in November, its lowest reading since August. The services sector is an exception with a diffusion reading of 52.6, above its breakeven reading but below the 56.8 reading in October; it indicates only bare-bones growth in the sector. As of November, the Future Index fell to 45.1 from October’s 46.4 and it is also on a weakening trend – it points to contraction ahead.

Economy Watchers Assessments: Assessing the level standings in the Economy Watchers index, standings of the headline and its components generally are above their 50th percentile, a level indicating they are above their historic medians (employment is the exception). Index level rankings show a great deal of variation with the services sector reading at a 90.7 percentile standing versus a low at its 26.7 percentile for employment. The Future Index is below its 50th percentile. However, ranked on year-over-year growth, the readings are all below their medians and below their respective 20th percentiles indicating weakness in momentum.

Teikoku Indexes: The Teikoku indices all are below 50 and have been that way for a series of months. However, evaluated against their index levels since August 2009 all the indices are at or above the 50th percentile indicating they are at or above their median values for that period. Still those rankings range from a 50th percentile reading for the construction sector to a high rating of only 64.5% in the wholesale sector. Alternatively ranked against their year-over-year growth rates only one sector, retailing, has a ranking above its 50th percentile; all the rest show growth rates that are below the median growth rates they had previously experienced. Manufacturing has the weakest growth ranking of all at its 31st percentile but that's not much better than construction at its 32.9 percentile, or wholesaling at its 39th percentile.

METI Industry Reading: The METI industry index increased month-to-month and has a ranking of its index level that is only in its 12.8 percentile back to 2009 - an extremely weak ranking for an index level that grows over time. The METI survey creates indexes of activity and is not a diffusion index, like the surveys above. The one-year growth ranking for the industry index is in its 33rd percentile, also below its median, indicating below normal and unsatisfactory growth in Japan's industrial sector.

The Leading Economic Index: Japan's LEI index while fall month-to-month has a level ranking only at its 30.8 percentile, well below its historic median with a growth ranking at its 28th percentile similarly below its historic medium for growth. The LEI index, like the METI industry index, is not a diffusion reading and should growth over time with the economy- a weak level index is a very poor reading.

The Situational Wrap-up These surveys paint a picture for the Japanese authorities that's quite challenging. The current assessments of the state of the economy indicated by the index level ranks are for the most part moderate or weak with few indications of strength. However, the growth rankings are unequivocally weak and pointing to deteriorating prospects. The Economy Watchers Futures Index is particularly weak and disturbing from the standpoint of the growth that it points to, and it agrees with the weakness from Japan's leading economic index that has only a 28th percentile standing.

Policy and Global Conditions The Bank of Japan has been fighting against the moderate inflation and it's in a much different position than other G7 central banks who, as a rule, seem to have much more work to do. But Japan is renowned internationally for its massive government debt levels; fiscal policy is not a tool that Japan can use. Meanwhile, deteriorating conditions and rising interest rates around the world are going to make the international situation more challenging for Japan, but with one key exception. Japan's most important trading partner is China and China has recently broken away from its zero Covid policies greatly enhancing its prospects for growth. Having better growth in China is more important to Japan than having better growth in Europe. Still, apart from this reintroduction of China, whose prospects for growth are still a little difficult to handicap, the prospects for global growth are getting worse as the World Bank has just cut a series of forecasts on global growth for the year ahead. The reduction slashes its former outlook for 3% growth to only 1.7% for 2023. Despite China lifting its zero Covid rules, the World Bank cut its outlook for growth in China, too, from 5.2% to 4.3%. Japan's current performance, its current assessment, and its prospects for future growth, put Japan in a very difficult position in this challenging global environment.
by:Robert Brusca
|in:Economy in Brief
Europe| Jan 10 2023
European Manufacturing Trends Remain Mixed
Output in the European Monetary Union shows the median rise across early reporting members of 1.3% in November. This is a rebound from a 1.2% decline among the same members in October and compares with a 0.5% increase in September.

Progressive growth trends The medians for their manufacturing growth rates are mixed with year-over-year IP output rising by 0.4%, the six-month median shows a gain of 1.8%, while the three-month median shows a fall of 1.2%, annualized. The progression does not point to any clear trend, although the disturbing element is the decline over the recent three months with five European Monetary Union (EMU) members showing industrial production declines over three months at annual rates ranging from minus 1.2% to minus 11.4%. Over six months only three EMU members show manufacturing output declines, the same as over 12 months.

Quarter-to-date developments Quarter-to-date tracking of industrial production trends in manufacturing are up to date through November; that's two out of three months of the fourth quarter. The median annualized change for the quarter at this juncture is a decline at a 1.5% annual rate. Greece, the Netherlands, and Finland show the largest quarter-to-date declines in progress while the strongest gains come from Belgium, Ireland, and Austria. There is quite a division in growth rates among these early reporting members for fourth-quarter growth, ranging from +20% to -13%.

Recovery since Covid There are still three European Monetary Union members, Germany, France, and Portugal that have not returned to the level of manufacturing output they had enjoyed as of January 2020 before Covid struck. The median among early reporting members shows the gain from January 2020 is 8.3%. The strongest gains from January 2020 comes from Ireland, Belgium, and Austria. These contrast with the countries that have not yet reestablished January levels for output.

Nordic growth Sweden and Norway, countries that are not European Monetary Union members, also have reported manufacturing production data early. Both show output declines in November but both show increases in the recent three months. Sweden shows a 0.4% gain over 12 months, a 1.4% annual rate decline over six months and a strong 5.3% pace over three months. Norway shows positive growth rates on each timeline with growth of 0.3% over 12 months, rising to 2.6% at an annual rate over six months, and ticking down to a 2% pace over three months.

Europe a mixed picture On balance, Europe does not show us strong trends for manufacturing industrial production. There is a solid gain in November but that follows an equally weak performance in October. However, among the nine early reporting countries, four of them Austria, Belgium, Germany, and Ireland show gains in output on all horizons over 12 months, six months and three months. Among those four, Belgium and Germany show trends that are steadily accelerating. On the negative side, only Finland and Greece show declines in output on all three horizons although both of those countries also show steady deceleration is in progress in each of them.

Still in the grip of cross-currents Europe is still in the grip of various cross currents as they are still in the aftermath of the adjustment to Brexit, still adjusting to life in the wake of Covid with the Covid virus still circulating, it has a full scale war going on just outside of its border between Russia and Ukraine, and the European Central Bank is in the midst of trying to get a grip on the inflation that emerged in the post Covid period. This is a lot to deal with at once and it's not surprising that European economies are having some struggle with it. The PMI data across Europe shows that there is a broad slowing of progress that really cuts across manufacturing and services industries. With inflation still excessive, and the European Central Bank raising rates, the prognosis for growth in 2023 is guarded.
by:Robert Brusca
|in:Economy in Brief
Europe| Jan 09 2023
Unemployment Rates Continue to Fall in EMU
The unemployment rate in the European Monetary Union (EMU) remained at 6.5% for the second month in a row. The unemployment rate for all of the EMU ranks in the lower one percentile of where that unemployment rate has resided since April 1994. Unemployment conditions in Europe across countries are excellent and quite low compared to their historic norms.

In November among the 12 early reporting European Monetary Union members in the table, only three reported an increase in their unemployment rate: Austria, Belgium, and Portugal. Ireland saw tick up in its unemployment rate in October.

In broad terms, over three months, the unemployment rate falls in six of these countries and rises in four. Over three months, unemployment rates fall in Finland, France, Italy, Spain, Greece, and the Netherlands. Over that same three months, unemployment rates rise in Austria, Belgium, Luxembourg, and in Portugal.

Over six months, the unemployment rate for the monetary union falls by 2.5 percentage points. The unemployment rate also falls in five countries: Belgium, France, Italy, Spain, and Greece. Over the same six months, the unemployment rate rises in six countries: Austria, Finland, Luxembourg, Ireland, Portugal, and the Netherlands.

Over 12 months, the trends are much clearer cut, but the unemployment rates fall broadly. For all of EMU, the unemployment rate falls by 0.6 percentage points. Over 12 months, the unemployment rate falls in all countries except for Austria, where it rises by 0.5 percentage points, Portugal where it rises by 0.2 percentage points, and in the Netherlands where it rises by one percentage point. Greece shows the largest drop in the unemployment rate over 12 months; its rate falls by 1.7 percentage points, followed by Italy where the unemployment rate falls by 1.2 percentage points, and by Ireland where the rate falls by 0.8 percentage points.

Ranking the unemployment rates from April 1994 shows only one country to have the unemployment rate above its historic median - that's Austria with the 68.9 percentile standing. All the rest of the monetary union members have standings below their 50th percentile. Luxembourg barely ducks under that mark with the standing at its 48.8 percentile and Greece has a 47.3 percentile standing. But after those three countries, the highest unemployment rate standing is Spain at its 30.2 percentile, followed by Portugal at its 20.1 percentile followed by Italy at its 16th percentile. Unemployment rates across Europe are, broadly, historically low.

There are still high unemployment rate countries in the EMU. Spain’s unemployment rate stands at 12.4%. Greece's unemployment rate stands at 11.4%. After that, Italy is at 7.8%, France is at 7%, Finland at 6.7%, and Portugal at 6.4% and so on. The low rankings in the face of some unemployment rates that are currently still numerically high remind us that there are still structural differences across the European Monetary Union. However, a number of countries that used to carry unemployment rates closer to 15% and 20% have seen a great deal of progress on that front and no country in the table has rates anything like that.

Of course, there are still concerns. And the monetary union is benefiting from this extended recovery from COVID but at the cost of inflation that is significantly above its target rate. The European Central Bank is raising interest rates and doing so at a rather measured pace. But there is still likely to be fallout across the EMU from the ECB’s actions. We just have not seen the effects yet. When central banks fight inflation, they slow aggregate demand. The reduction in aggregate demand growth sometimes results in an outright reduction in aggregate demand and usually produces increases in unemployment. Increases in unemployment help to reduce the inflation rate that the central bank is targeting. It's an unfortunate and painful process, but that's how it works. And we are looking for these effects to visit the European Monetary Union in 2023 as the ECB continues to hike rates.
by:Robert Brusca
|in:Economy in Brief
Europe| Jan 06 2023
EMU Retail Sales Bounce in November. But bouncy, bouncy, will bump up against a central bank smack-down
Retail sales in the European Monetary Union (EMU) rose by 0.8% in November after falling by 1.5% in October and rising by 0.8% in September. Retail sales have been gradually digging themselves out of a hole as retail sales volumes fall at a 2.8% annual rate over 12 months, fall at a 1.9% annual rate over six months, then manage an increase at a 0.4% annual rate over three months. Still, quarter-to-date retail sales volume is falling at a 2.7% annual rate.

On the other hand, motor vehicle sales and the European Union (EU) area rose by 13.3% in November, after falling by 6.7% in October, and rising by 2.1% in September. There is not a clear pattern to the growth rate of motor vehicle sales in the European Union. However, there is a consistent picture of those sales rising on all the time horizons. EU motor vehicle sales rise at an 18.6% pace over 12-months, accelerate to a 72.3% annual rate over six-months, and then ‘ease back’ to a growth rate of 35.9% over 3-months. All of these are extremely strong growth rates and suggest some ongoing recovery in the sales of motor vehicles. And, in the quarter-to-date, motor vehicle sales in EU are rising at a 36.1% annual rate.

Among the key early-reporting European countries, some of them EMU members and some of them not, there are increases in sales reported in November in six of the seven presented in the table. The exception is a decline in November in UK sales volumes. Meanwhile, Spain leads the parade of month-to-month increases with a gain of 3.8%, followed by Sweden at 2.2%, Portugal at 1.6%, Germany at 1.1%, and Norway at 0.9%.

The sequential growth rates for these countries, however, paint a mixed picture for retail sales. Germany shows declines on all the horizons from 12-months to 6-months to 3-months as does Denmark, the UK, and Sweden. Portugal and Norway show declines in all the periods with the exception that each of them has an increase over the recent three months. Only three countries in the table are EMU members: Germany, Spain, and Portugal.

EMU Member Trends: In the case of Germany the weakness in sales is diminishing as sales fall at a 5.9% pace over 12-months, that's reduced to a 4.7% pace of decline over 6-months, and that decline slows further to a -1% annual rate over one month. Spain shows outright acceleration, with sales falling 0.6% over 12-months, then rising at an 8.1% pace over 6-months, and a faster gain at a 19.3% pace over 3-months Portugal also shows sales moving to a more positive direction as they fall at a 1.3% pace over 12-months, drop at a 0.2% annual rate over 6-months, then rise at a 0.6% pace over 3-months.

Non-EMU Trends: As for the rest of the European reporters, the same progression from weaker to less weak declines holds for the most part. We see that most strongly in Norway, the condition is present for the UK. Sweden shows less weakness over 3-months than over 12-months although it shows more severe weakness over 6-months. Denmark shows weakness abating from 12-months to 6-months but then more weakness over 3-months at nearly the same pace that sales fell over 12-months appears. On balance the progression towards more strength/less weakness is stronger for the European Monetary Union member countries than for the EMU non-members.

Retail and Auto Sales Trends: The chart of retail sales volumes and passenger car registrations underscores these developments with strength in passenger car sales clearly depicted although those sales are still quite weak when compared to what historic levels of sales had been and where trends were and where they were headed prior to Covid. If we extrapolate the past to see what we would have expected at this time prior to the strike of Covid, we would expect to see levels of auto sales far superior to the ones that are being posted now, despite their current strong gains. The same is true for retail sales volumes, although the retail sales volumes did recover from Covid and then moved to even higher levels; but, since 2021 sales volumes in the European Monetary Union have continued to work their way slightly lower.

Outlook and prospects: Central banks are raising rates and with ongoing angst over the war between Russia and Ukraine, consumer attitudes within Europe have been impacted and are adversely affecting retail sales trends. Consumers are wary of what central banks are planning as they are aware that inflation is well over the top of what's targeted and they expect central banks to continue to take actions to bring inflation back into line; there are clearly concerns about what that will do to the economy. The survey data on PMIs show that, globally, as well as in Europe, there's a slowdown in progress that is now affecting both the manufacturing and the nonmanufacturing sectors. New data from the US today- although showing weakness in the US PMI statistics- also shows ongoing strength in the US job market including a decline in the unemployment rate to its cycle low in December, a largely unexpected event. With such strength and with continued firmness in wages in the United States, it seems clear that the Federal Reserve will continue to raise rates and that will put pressure on other global central banks to follow suit. It's more likely that the period ahead brings more economic weakness than some sort of recovery as the trends in retail sales in the European Monetary Union might seem to suggest. At the moment, that is a trend that will have a tough time extending itself in 2023.
by:Robert Brusca
|in:Economy in Brief
Global| Jan 05 2023
Global Composite PMIs Erode or Show Contraction
The global S&P composite PMIs for December generally show weakness and declining momentum. In December, 9 jurisdictions show weakening composite PMIs compared to the month before (out of a sample of 22). Sixteen of these jurisdictions have composite PMI readings below 50 that indicate overall activity is eroding. The number showing month-to-month slowing has been diminishing from 15 in October to 11 in November to 9 in December; that's some improvement in terms of the breadth of jurisdictions reporting weakening month-to-month activity. However, the number of jurisdictions below 50, indicating outright contraction, remains high at 16 in December, the same as in November. And that number accounts for more than half of the reporters.

Large vs small country observations- In fact the count in this table is not weighted for economy-size and a quick glance at the table will show that the larger economies are showing a pronounced tendency to be below 50 and to decline month-to-month. The tendency to decline month-to-month has abated slightly in December among the larger economies (among G7 countries only France and the US erode month-to-month in December). Among G7 countries all have composite PMI readings below 50 in December, November and October save a reading of 51.8 in October for Japan (Japan has not yet reported for December, but was below 50 in November). The G6 percentile standings in December average 19%-weaker than the full sample average and median.

Thick as a bric? - The US, the UK, and the European Monetary Union have PMI readings that stand below the 20% mark in their historic queues for the last 4 1/2 years they average a standing at their 12 ½ % mark of their respective distributions. For now the BRIC countries are doing better than this, they have a 61.6 percentile standing in their historic queue (for this reading I exclude Russia) and this leaves them with readings that are above their historic medians. However, the average and median percentile standings for all members is reading is in the 20th percentile (27.3% Avg, 21.4% median) indicating significantly weak readings. Of the 22 readings in the table in fact, ten (of 22) have queue percentile standings below their 20th percentile.

More broadly... Looking at broader data over three-months, six-months, and 12 months we see more consistent readings concerning weakness and the breadth of slowing. On this smoothed basis the breadth of slowing has actually grown over the recent three months and the number of jurisdictions with an average reading below 50 over 3-months is 14, the same as it was over six-months and both of those numbers are much worse than what they reported on 12 month averages. Neither is that surprising since averaging below 50 over 12 months is an extremely weak condition.

Economic Landscape- The economic conditions for the global economy have not changed much. What that means is that inflation continues to be overshooting on a broad and significant scale. Central banks have been raising interest rates and they are continuing to raise interest rates with markets unsure where the end point for the rate hikes will lie. While inflation is overheating there are some indications that the escalation of inflation has stopped and there is some backtracking particularly based upon oil prices and commodity prices. But so far the backtracking is minor and episodic compared to the strong readings in the gauges that central banks focus on and target. And, in a recently released central bank report of commentary by central bank officials in the US, there were no members on the Federal Open Market Committee (FOMC) – no members among 18- who saw any interest rate reductions by the Federal Reserve in the year ahead.

War continues, with supply chain, fiscal, and geopolitical impact- The Russia Ukraine war continues full tilt and that continues to absorb a great deal of resources from the countries that are backing Ukraine while the war continues to be a great drain on the Russian economy that is also laboring under the weight of sanctions imposed by Western countries over Russia having instigated that war. However, and ominously, as that war drags on there's evidence of dissent within Western nations, not so much among their leaders, but within the countries among various political factions that the spending on the war is becoming increasingly unpopular. This development, of course, could encourage Russia to continue to fight even as its losing if it thinks that in the long run it can break the will of the Western countries that are supporting Ukraine. It’s a dangerous situation.

Energy- The global energy situation remains strained particularly with the United States focused on green policies and refusing to pump more oil even though it is an oil rich country while in Europe there has been some backtracking on green agendas because of the extreme strain that Europe is under and its need for energy since the Russian pipelines have been turned off. The US is helping US oil to pump more in Venezuela where some of the most sulfur-intensive, heavy oil, is found. This does not seem very ‘green’ to me… These conditions continue to be central to the way policy is run in Western countries. With China ending its zero Covid policy there is some concern that global energy demand could be rising and could strain prices again.

Policy candor? - Increasingly policymakers, even among central bank members, are talking more frankly and openly about the prospect for some sort of recession this year although this talk is quickly diverted to the topic of how any recession is likely to be moderate.

Central bankers on the hot-seat- Central bankers are having a hard time coming to grips with the fact that they played inflation very badly under Covid and it is greatly out of control because of their inattention and poor decisions. However, central banks still want to be seen as having credibility and the backbone to fight inflation and a desire to reduce it back to their target in an expeditious fashion. And while they are quite clear in stating that goal, they are much more wishy washy when it comes to explaining how they're going to get that job done. As central banks look at the future, they are far less willing to talk about doing ‘whatever it takes’ and much more prone to talk about taking some specific steps that they then argue are going to be sufficient while they worry about doing too much and about the impact on the economy. This sort of mixed-mouth mumbling does not instill faith among people in markets that the central banks have the will to achieve the objective that they claim they intend to achieve.

What markets expect... or handicap- Despite these lingering questions about central bank credibility and their backbones, markets seem to be handicapping that a less aggressive policy from the Federal Reserve in the United States will have a more pronounced economic impact. Markets see more rate cutting and sooner Fed rate cutting than the Federal Reserve is mapping out in its the so-called dot plot that provides some forward guidance on where policy is going. However, it's not clear that this is because markets think that (1) Fed policy is going to be more effective in bringing inflation down or (2) whether markets think that Fed policy is going to have a larger impact in bringing the economy down or, (3) whether markets simply view the central bank as having less of a backbone and being unwilling to continue to raise or hold rates even if inflation remains excessive once the unemployment rate begins to rise.

The future- All of this means that the future is still very much up in the air. Much of what we see going on in the world with central banks raising rates keys off of what the Fed has done and how it began to raise rates in March of last year. Most of the turbulence in global markets stems from that event. Clearly what the Fed does with policy is going to be a linchpin for the rest of the world and right now there doesn't seem to be a very clear view of what that policy will be even in the face of the Fed providing us with what it would call “guidance” and markets basically rejecting that. Remember that two years ago Federal Reserve’s “guidance" would have projected inflation around 2% and any Federal Reserve member confronted with what is now the reality of inflation would have denied the possibility of this ever occurring. Yet it has occurred. And the Fed has yet to provide us with any credible statements as to how this happened on its watch and why we should not be worried that it could happen again. Nor has the Fed said with conviction that it is prepared to do ‘what’s necessary’ to bring inflation to heel ‘quickly.’ We have gone down the rabbit hole, and it’s a different world in this wonderland than the one Paul Volcker lived in. The dual mandate lives, and both prongs of the mandate are equally important…except one prong may be more equal than the other. Once the central bank does what Volcker refused to do- take responsibility for unemployment in the short run- we are in a different realm. Your anti-inflation Fed decoder ring no longer works here. Just pat attention to what the Fed says and that is clear…
by:Robert Brusca
|in:Economy in Brief
Ireland| Dec 08 2022
Irish Inflation Flattens Out at High Pace
Ireland's inflation rate in November rose by 0.3% after surging by 1.5% in October and gaining 0.3% in September. There are hints here of inflation slowing since we have two moderate months, but there's a substantial increase between the two 0.3% increases in November and September that helps to drive the three-month annual rate up to an annualized 8.4%. That marks an acceleration from 8.3% over six months although it is slightly cooler than the 8.9% annual rate increase over 12 months.

Ireland's domestic inflation metric Ireland's domestic price index shows heated inflation with an 8.9% increase over 12 months, the same as the HICP total, carrying a pace of 8.8% over six months, above the six-month pace for the HICP, and rising to a 9.9% pace over three months that dwarfs the HICP three-month gain. The domestic index also offers up a CPI core measure that is a little bit more optimistic, showing a 5.5% gain over 12 months, rising to a 6.2% annual rate over six months but then falling to a 4.4% annual rate over three months. However, the CPI core is up 0.5% in November, by 0.5% in October and by 0.2% in September. It continues to run hot in recent months at a pace that's something more like a 6% pace, although the three-month pace is knocked down to 4.4% because of a relatively moderate result in September.

How broad is inflation? Ireland also offers some optimism on the front of diffusion. Diffusion measures the breadth of inflation acceleration from period to period. The diffusion values in the table show that diffusion over 12-months is at 75%. That means that over 12 months compared to 12 months ago, inflation is accelerating in 75% of the categories. Over six months, diffusion is down to 25%, telling us that only one quarter of the components of inflation are showing stronger inflation over six months compared to inflation rates over 12 months. Over three months, diffusion is still low, but ticks slightly higher to 33.3% indicating that one-third of the components are showing accelerated inflation over three months compared to six months. Diffusion values less than 50% indicate that inflation is accelerating and fewer than half of the category and that's good news. Diffusion gives us different results than the headline inflation measure because diffusion calculation treats all categories as equal without using any weighting. The headline inflation rate of course attributes weights and economic importance according to the category involved so there can be differences in diffusion and in overall inflation and its performance. But the idea behind diffusion is that if inflation is truly inflation, (a broad phenomenon, rather than driven by a few rogue categories), it should be infecting most of the components. Weighting may put a finer point on the pace of inflation but should not be a critical issue in detecting inflation. The Irish figures are reassuring because they show us that the breadth of inflation has narrowed quite a bit even though on a weighted basis inflation continues to run relatively strongly. The substantially lesser pace of core expansion adds to that sentiment.

Inflation across components When we look at the components in November, we get some sense of what's going on here with rent & utilities up at a very strong pace, rising by 0.7% in November and up by 8.1% month-to-month in October. This is a category with a very heavy weight and a very high inflation rate; it's one of the things that's driving inflation and causing the inflation numbers to be high even when the breadth numbers are not particularly menacing. Rent & utilities, for example, are up at a 46.1% annual rate over three months and rising at a 26.6% annual rate over six months. This is a category that's adding a great deal to inflation and its strong pace has been very stubborn.

On a quarter-to-date basis, inflation is not performing quite as well. These data are for November so we're looking at inflation for two months in the fourth quarter compared to the third quarter base. Viewed in this way, the HICP headline measures is up at a 9.1% annual rate, the domestic inflation rate is up at a 10.6% annual rate, and the domestic CPI core is up at only a 4.7% annual rate. Inflation in the headlines is still carrying a strong pace; the core is showing some significant temperance for inflation pressures in Ireland so far in the fourth quarter. In the fourth quarter, prices for clothing & footwear fall by -1.1%, education costs fall at a jarring -26.4% annual rate, restaurants and hotel prices fall at a -2.5% annual rate. However, rent & utilities are still rising at an enormous 54.4% annual rate in the fourth quarter lighting a fire under inflation, although because the category is rent & utilities it obviously has some energy mixed in with other housing cost measures- not all of it is in the core measure.
by:Robert Brusca
|in:Economy in Brief
Norway| Dec 07 2022
Norwegian IP Trends Show Resiliency
Norwegian industrial production has been weak and struggling since late-2021 as the graphic clearly shows. And despite some ongoing struggles and clear problems in Europe with energy and with security, Norway shows signs of stabilizing its manufacturing sector.

Norway's headline industrial production measure, which excludes construction, is decelerating from 2.8% growth over 12 months to 1.3% over six months to a decline of 2.6% at an annual rate over three months. Utilities output declines at a 10.3% annual rate over 12 months, logs a decline at a 24.2% annual rate over six months, and plunges to a decline at a 41.1% annual rate over three months. But that may be more a function of energy availability than a reference on economic activity. Although mining & quarrying is also weakening, from a 2.1% pace over 12 months to a modest 0.8% annual rate of gain over six months to a 5.4% annual rate of decline over three months.

Manufacturing is a counterpoint to encroaching weakness In contrast to those metrics, manufacturing is up by 1.7% over 12 months, it is falling at a 0.5% annual rate over six months but then is increasing at a 1% annual rate over three months. The three-month rate of change isn't particularly strong; however, it clearly breaks the chain of declining activity and provides a counterpoint to overall production, to utilities trends, and to mining & quarrying trends. The production of food shows uneven trends although within manufacturing the production of textiles does show sequential weakness migrating from a 2.8% growth rate over 12 months to a -5.9% pace over six months and to a -8.9% pace over three months.

Manufacturing sectors are mixed However, looking at the sectors within manufacturing rather than individual industries, we see a lot more ambiguity about trends. The consumer goods sector overall does show weakening with the growth of 4% over 12 months, a modest gain of 0.8% over six months and flat performance over three months. This is clearly decelerating growth. Consumer durables show declines in output on all three horizons, but there is a pickup - less of a decline - over six months followed by a much more severe decline over three months. Durables trends do look troubled. Consumer nondurables, in contrast, show growth on all three horizons, rising at a 5.7% annual rate over 12 months, at a weaker, 1.5% pace over six months then stepping up to a 2.6% pace over three months. Intermediate goods showed declines on all horizons, falling 0.4% over 12 months followed by a 5.6% annual rate drop over six months and a 4.5% annual rate drop over three months. The sequential trends may be muddied but the direction here seems clear. The capital goods sector, in contrast, shows acceleration with a 5.1% rate of growth over both 12 and six months that steps up to a 5.7% pace over three months. Manufacturing is a mixed bag with more weakness than strength on these metrics.

While these trends are mostly permeated by declines and weakness, capital goods is a striking contrast and the fact that industrial production does show clear declining trends. Manufacturing does not show weakness across all the sectors - in fact, it doesn't show decelerating trends overall, only in the overall consumer goods sector which culminates over three months in flat performance, not in decline.

Inflation runs hot...some let up Meanwhile, inflation in Norway continues to run relatively hot. The pace year-over-year is 8.4%; it rises to a 9.7% pace over six months, and then barely cools to a 9.6% pace over three months. The core inflation measure is up at a lesser 6.1% annual rate over 12 months, but that accelerates to 7.5% over six months, then it cools to a 5.5% pace. Still, all these are excessive growth rates for inflation.

Quarter-to-date... Quarter-to-date (QTD) industrial production excluding construction is up a very robust 7.9% annual rate; manufacturing output is up at a 3.3% annual rate; manufacturing consumer goods shows expansion at a 3.3% annual rate; intermediate goods output falls at a 4.3% annual rate. But capital goods output is rising at an 8.3% annual rate. The QTD calculations are nascent calculations for the fourth quarter representing the growth in October over the third quarter average with the growth rate properly compounded over that third quarter base. Over that same third quarter base, inflation is rising at a 10% annual rate QTD with the core up at a 6.6% annual rate.

Since COVID... As a summary statistic, I have taken the ratio of current industrial production to the level of industrial production just before COVID began in January 2020. Overall industrial production is up by 8.7% on that timeline (a bit less than 2% per-year on average), manufacturing production is up by only 0.4% on that timeline, mining & quarrying is up nearly 50% on that period. While utilities output is only up by 2.5%. Looking at manufacturing sectors, consumer durables output as of October is lower than it was in January 2020 and capital goods output is still lower than it was in January 2020. The strongest gains in output among these sectors are for consumer goods at 3.1% and consumer nondurables at 3.1%. Intermediate goods output is up by 2.4%.
by:Robert Brusca
|in:Economy in Brief
Germany| Dec 06 2022
German Orders Rise, But There's Really No Surprise
Real industrial orders in Germany rose 0.8% in October, led by a 2.5% rise in foreign orders. Domestic orders fell by 1.9% in October. While unexpected, this gain in orders can't be considered a surprise. The 0.8% order increase comes after a 2.9% fall in September and a 2% fall in August; the 2.5% gain in foreign orders in October follows a 5.2% drop in September and a 1.7% monthly drop in August. Domestic orders had risen by 0.5% in September but also fell by 2.6% month-to-month in August.

Sequential growth rates out the truth As is usually the case, the sequential growth rates tell a clearer story about what is really going on with the trends in orders. One year ago, the year-over-year change in orders was a gain of 0.4%. This year the 12-month gain from that base is a decline of 3.1%, over six months it's a decline at a 6.5% annual rate, and over three months it's a decline at a 15.7% annual rate. Overall orders are decelerating and decelerating steadily on these time horizons. Foreign orders one year ago fell 0.7% over 12 months; this year the 12-month change in foreign orders is a fall of 0.4%, a fall at a 0.2% annual rate of decline over six months- only slightly smaller – and a drop at a 16.4% annual rate over three months. Clearly, another very weak growth rate profile. Domestic orders a year ago rose 2.1% year-over-year but over 12 months domestic orders are falling by 7.1%; over six months they're falling at a 14.9% annual rate; over three months they're falling at a 14.9% annual rate. Domestic orders clearly are weak and are not reviving as the monthly gain might otherwise suggest.

Quarter-to-date (QTD) The quarter-to-date calculations show trends with total orders falling at a 10.9% annual rate, one-month into the fourth quarter with foreign orders falling at a 9.4% annual rate and domestic orders falling at a 13.6% annual rate. These are sharp declines for annualized growth rates adjusted for inflation. Orders have not been strong in Germany for a while. Calculating growth in orders form just before COVID started, in January 2020, total orders are now 2.1% lower from that mark while foreign orders are 2.2% lower and domestic orders are 2.1% lower. These metrics reveal similar weakness across domestic and foreign entities.

Real sales by sector Real sales by sector show better life than orders, but orders are the leading series and sales are the trailing series…. As an overview, total real sector sales are rising at a 2.2% annual rate in the quarter-to-date with manufacturing sales rising at a 2.8% annual rate. Sales are being held back mostly by an 18.1% annual rate decline in consumer durables that has total consumer sales down by 1% at an annual rate in the quarter-to-date. In addition, intermediate goods sales are falling at a 10.8% annual rate QTD. Rising in the quarter-to-date are capital goods sales, up at a 15.3% annual rate and consumer nondurable goods sales rising by 3.1% at an annual rate.

Growth profiles for real sector sales are erratic weakening However, the details on real sector sales show widespread declines over the last two months; sales in six of the seven categories fall month-to-month in October and sales fall in five of seven categories in September. Sequentially real sales data grow by 5.5% over 12 months, accelerate to a 10.7% pace over six months, then decelerate back to a 5.3% annual rate over three months. That is fairly encouraging and stable. Consumer goods sales fall 0.6% year-over-year and fall at a 6.3% annual rate over six months, but then recovered to gain at a 7.1% annual rate over three months, complicating the picture. Still, this is against the weight of consumer durable goods where's sales rise by 1.6% over 12 months, fall at a 7.7% annual rate over six months, and then fall at a faster 8.3% annual rate over three months. Intermediate goods also show sequential deterioration and deceleration with a 1.4% decline over 12 months, a 3.1% decline over six months, and a 6.1% decline over three months. Capital goods show a great deal more strength, up by 15.1% over 12 months and up at a 33.4% annual rate over six months but then cool back to a still very strong 15.9% annual rate over three months. Consumer nondurable goods sales fall by 1% over 12 months and fall at a faster 6% annual rate over six months but then recover at a 10.3% annual rate over three months. The capital goods sector is the only exception and the only source of real strength in sales.

The trends in real sales by sector are a lot more confusing than orders. The quarter-to-date data suggests that the consumer sector and intermediate goods sector are still dragging things down while consumer nondurable goods by themselves are showing moderate growth against capital goods that are growing strongly – for however long that can last in the face of weakness elsewhere.

EMU's 'Big Four' Economies In the bottom panel of the table, the EU industrial confidence measures are presented for Germany, France, Italy, and Spain to compare German trends to the next three largest economies in the European Monetary Union. Germany has a positive reading of plus three in October compared to France at -6.7, Italy at -4.1, and Spain at -4.0. However, looking at the sequential averages of these EU diffusion readings, we see that each of these four countries shows its six-month gauge weakens compared to the 12-month gauge and the three-month gauge weakens compared to the six-month gauge. There is clear weakening going on across the European Monetary Union's largest economies. However, the queue standings that evaluate the levels of the October readings compared to recent history (in this case taken back to 1990) shows more strength than you might expect. The German reading has a 78-percentile standing which is quite firm. Spain has a reading at its 54.5 percentile which is above its historic median. France, at its 48.9 percentile standing, is only slightly below its historic median. Italy at 42.4 percentile standing is below its historic median and weak but far from collapsing.

Growth since COVID after the bust/boom cycle has been weak Evaluated from their level in January 2020 before COVID struck, the German industrial confidence measure is the relative strongest in this group, having risen 13.6 points from that mark; Spain has risen by 5.4 points, Italy has risen by 0.9 points, France has a net lower reading, falling by 3.8 points from its level on January 2020.
by:Robert Brusca
|in:Economy in Brief
Global| Dec 05 2022
S&P Composite PMIs Continue to Erode
S&P composite PMIs for November worsened generally across the reporting global community. Among the 23 reporters in the table, we see in November 15 of them have PMI gauges below 50 indicating a contraction in the overall economy (since these are composite indexes) while 12 of 23 indicate that there is a slowdown in progress. Ten of the 15 PMIs below 50 are also slowing.

The November metrics are generally slightly worse than those from October and September indicating that there is some ongoing slippage occurring. In addition, if we look at the averages from 3-, 6-, and 12-months, we see the number of jurisdictions with readings below 50 swells in number from 4 to 7 to 13 while the number that are showing slowing activity rises from 3 to 16 to 18. There clearly is a broadening of the weakening and that is worrisome.

We also see a great deal of weakness among the largest market economies at the top of the table over the last three months. Looking at the United States, the European Monetary Union, Germany, France, Italy, and Spain as separate entities, these are six observations over three months giving us 18 observations and yet among those 18 only 6 of the observations showed month-to-month improvements. Looking at the same group of countries over three months, six months and 12 months, all of them are worsening on all of those horizons.

Looking a little bit more deeply at the queue standings that rank each one of these observations and their recent approximately 4 1/2 years of queue of data, we find that for the U.S., for the European Monetary Union, Germany, France, Italy, and Spain all of them have queue standings below the 25th percentile, most of them below their 20th percentile. These are all extremely weak readings.

The extent and degree of weakness The queue versus percentile standings generally shows very different results. The percentile standings position each observation in its high-low range as a percentile position for the period while the queue metric positions each observation relative to all the observations. When you look at the queue standing, you see where this observation stands in percentile terms versus all the observations that have been registered during the last 4 1/2 years. The queue gauge only gives us the relative position proportionally versus all the other observations. The percentile gauge, in contrast, uses only three observations. The difference is that the percentile numbers show us that there is very little abject weakness in the November readings. Placing each November observation between its respective highs and their lows leaves most of them above their 50th percentile that is above their mid-range observation. Only Qatar at a 39.5 percentile standing, Sweden with a 44.1 percentile spending and the U.S. with a 46.4 percentile standing are below their respective historic medians. The weak queue standings tell us that the preponderance of readings over this period have been stronger, but the relatively firm percentile standings tell us that current levels of the variables do not threaten the sort of lows we see during periods of extreme weakness such as during Covid since those readings fall in this period comparison and mark out of the lows.

Current standings: As an example, the average unweighted U.S., U.K., European Monetary Union, Japan composite PMI is at 47.8 in November; that's down from 48.8 in October and from 49.4 in September. This is clearly slipping weakness, and these are observations below 50 indicating contraction, at least in the lexicon of the PMI data; however, these are not exceptionally weak readings. The median for the entire sample of countries is at 48.9 in November, down from 49.4 in October and from 50.9 in September. There is sliding weakness considering the entire sample. And as we saw, the number of jurisdictions below 50 has been expanding and the numbers slowing have been relatively steady and in double digits. A good deal of weakness is pervasive but so far it is weakness of a more moderate variety with the overall average and median percentile standings around their 70% mark.
by:Robert Brusca
|in:Economy in Brief
Canada| Dec 02 2022
Canada Shows Mixed But Still Strong Job Gains
The unemployment rate for Canada in November fell to 5.1% in November from 5.2% in October. Canada, like the United States, has inflation problems whose profile looks quite similar to the U.S. inflation statistics. The two countries seem to be in the grip of the same cycle, which is usually the case. For now their domestic statistics are looking remarkably similar. What that means is that Canada's drop in the unemployment rate is unexpected and not what policy has been looking for. Canada's inflation rate for its core is over 5% and the headline CPI is much higher than that at nearly 7%.

Canadian job growth rose by 10,100 in November, sharply weaker than the 108,300 gain in October and weaker than the 21,100 in September. The three-month average gain of 46,500 is far ahead of the 4,300 average over six months and better than the 30,700 average over 12 months. In percentage terms, total employment rose by 1.9% over 12 months

Goods sector employment shed 9,400 jobs in November after gaining 45,100 in October and losing 24,800 in September. The sector has been erratic in current months. However, good sector job gains have been slowing steadily from an average of 11,300 over 12 months to an average of 8,700 over six months, to 3,600 over three months. The sector has gained 3.5% over 12 months

Within the goods sector, manufacturing jobs rose by 18,500 in November, rose by 23,800 in October and fell by 27,500 in September. Manufacturing sector jobs are marginally lower over 12 months. Gains average a monthly rise of 6,900 over six months and 4,900 over three months. Over 12 months manufacturing jobs are lower by 0.1%.

Service sector jobs gain 19,600 over November, slower than the 63,200 for October and the 45,900 in September. Service sector job gains average 19,500 over 12 months. The average decline is 4,300 over six months but now has averaged gains of 42,900 over three months. Sector gains in services have also been relatively volatile; the sector has gained by 1.5% year over year.

Within the service sector, accommodation and food supply workers have seen the fastest growth at 6.7% over 12 months. Professional and technical jobs have been the next strongest, rising 5.6% over 12 months. Jobs in information and culture have grown at a 4.5% pace. At the other end of the spectrum, the services sector jobs in transportation have declined by 3.8% over 12 months; jobs in trade have declined by 2.7% over 12 months while gains in healthcare and service professionals have increased by only 0.6%. There have also been very small gains in management. The number of managers employed has grown by only 0.2%.

The labor force participation rate in Canada has moved slightly lower. Its 12-month average is 65.1%. Its three-month and six-month averages both are 64.8%, which is the same as its value in November. The participation rate has been relatively stable; however, it tends to the weak side. Over 12 months the unemployment rate has fallen by 1%; its 12-month average is 5.4% that fell to 5.1% over six months and averages 5.2% over three months although in November the unemployment rate is back down to 5.1%.
by:Robert Brusca
|in:Economy in Brief