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

Germany| Aug 21 2023
German PPI Is Off Sharply But It’s the Usual Dilemma
The German PPI is falling by 1.1% in July compared to June. The PPI now has a string of months in which prices are falling. This in fact looks even more persuasive because the PPI ex-energy fell by 0.4% in July, and it also has a string of months in which inflation is falling. But it’s only PPI inflation, not the sky. Central banks do not target producer prices. Table 1 also shows for comparison what's going on with the CPI; it has increased in two of the last three months. The CPI ex-energy has also increased in two of the last three months. As you look at these trends more broadly, producer prices are in fact coming to heel very sharply. And more than that, PPI prices are weak. However, consumer prices have hardly benefited from this trend at all.

The PPI excluding construction in Germany has fallen by 6% over 12 months; it falls at a 10.1% annual rate over 6 months and falls at a 10.4% annual rate over 3 months. That's impressive weakness. The PPI excluding energy rises 2.1% over 12 months, falls at a 1.1% annual rate over 6 months and falls at a 3.9% annual rate over 3 months indicating ongoing deceleration in the PPI ex-energy.

In comparison, the CPI, which is emphasized by the ECB (it targets the HICP), is up by 6.1% over 12 months; however, the pace slows to 3.5% over 6 months and slows further to 1.7% over 3 months. This declining progression brings the 3-month growth rate inside the target range for the ECB, but again central banks do not typically place a great deal of weight on these shorter-term compounded inflation rates. Looking at the CPI ex-energy we also see a 6.1% gain over 12 months, a 4% annual rate gain over 6 months, and a 2.5% annual rate gain over 3 months. Once again, we see clear inflation deceleration and progress but less deceleration than for the headline and even over 3 months there is less good news when the CPI ex=energy fails to drop inside of the ECB target range.

The chart (on the right) plots the PPI ex-energy against the CPI ex-energy. The chart is perhaps the best way to understand the stark difference and the difference in trend between these two metrics. The chart gives you a hint that historically the PPI is more volatile than the CPI and that it goes through exaggerated cycles in comparison with the CPI. In other words, just because the PPI accelerates sharply or decelerates sharply doesn't mean the CPI will run the same magnitudes; however, usually, the accelerations and decelerations of the PPI are reflected in some acceleration or deceleration in the CPI. It's just less pronounced. That seems to hold in this cycle as well.
by:Robert Brusca
|in:Economy in Brief
Japan| Aug 18 2023
Japan’s Inflation Remains High and Stubborn
Japan’s inflation in July continues at a pace in excess of the target sought by the Bank of Japan. However, inflation is not running wild; it's simply running hotter than the BOJ wants it to. Inflation had moved quite low in May with the headline of 0.1% and then picked up to 0.2% in June. The core rate, that had risen by 0.4% in May, slipped to a weaker rise of 0.1%. July shows the headline pace continues to accelerate with an increase of 0.4% and the core (all items excluding food & energy) logs the somewhat neutral 0.2% increase on the month.

July was an empty pinata for the hopeful On balance, the progression of inflation through July is disappointing. The monthly patterns are no longer encouraging and their progression of inflation from 12-months to 6-months to 3-months is neither disturbing nor encouraging and instead depicts an inflation rate that is wandering at a pace that's simply too high but without a clear trend. Headline inflation is up 3.2% over 12 months; that pace slips to 1.9% over 6 months but then moves back up to 2.7% over 3 months. The core pace that excludes food & energy shows the 2.6% increase over 12 months, rising to a 3.6% annual rate over 6 months, then settling back to a 2.8% annual rate over 3 months. While the core rate decelerates from 6-months to 3-months, the 3-months the rate is still above the 12-month pace which is not the signal that the Bank of Japan is looking for from the inflation rate.

Monthly inflation patterns If we rummage through the details of monthly inflation by industry, in July there are strong gains in reading and recreation as prices rose by 1.5%; also, for food and beverages as prices rose 0.8%; for clothing and personal items prices rose by 0.5%. In June there are not as many pressures present, but the largest month-to-month gain in these major categories is 0.3%. Categories with the max gain include food & beverages, clothing & personal items, and the miscellaneous category. Meanwhile, housing costs were flat in June as reading & recreational prices slipped by 0.2% month-to-month. In May when headline inflation was so low, four categories had increases of 0.4%; those were food & beverages, medical care, reading & recreation, as well as transportation & communication.

Longer inflation patterns Looking at these industry patterns, sequentially there's scant evidence of categories with inflation accelerating or decelerating for the most part inflation is just gyrating. Inflation changes look more chaotic or somewhat random. Over 3 months inflation decelerates for food & beverages, for educational costs, for medical care, for reading & recreation, and for transportation & communication. There are two decelerations in a row only for food & beverage prices that slip from an 8.7% gain over 12 months to an 8.6% gain annualized over 6 months, to a 6.2% annual rate over 3 months. That's the only category that shows clear directional progress; it's also the category with the hottest 3-month inflation growth rate.

Inflation steps into a new quarter With the July report, we're one month into a new quarter and looking at the rise in inflation in July relative to the previous quarterly average. The quarter-to-date headline inflation at 3.3% with core inflation running at a 2.4% annual rate, finds inflation is excessive for food & beverages at 7% in the quarter, clothing and personal items inflation is at 4.4%, reading & recreation prices are up at a 9.4% annual rate, while transportation & communication prices are up to a 3.6% annual rate. However, housing prices, education, medical care, and miscellaneous items are all running inflation rates in the one to 1 ½ percent range, quite subdued.
by:Robert Brusca
|in:Economy in Brief
Japan| Aug 17 2023
Japan’s Trade Trends Wither…to the Delight of GDP
Japan's trade trends continue to show deterioration. The early press reports on Japan's trade picture have focused on weak Japanese exports and how this weakness is going to constrain domestic growth. But such analysis dwells on only half of the picture in trade.

International trade and the theory of relativity The international contribution to GDP comes from the current account and with some small adjustments it becomes something called GDP net exports. This measure is the difference between exports and imports- as always expressed in real terms since we are always interested in real GDP growth. When exports exceed imports, there's a boost to GDP from trade; if imports exceed exports, there's a subtraction from GDP. It is not just exports that matter, or just imports; it’s one flow relative to the other. They both matter. Like any other flow quarter-to-quarter, the impact of the flow, in this case the net flow, on GDP, depends on the change in this balance or net. The second quarter in Japan saw that trade made an enormous impact on GDP; in fact, trade accounted for all the growth in GDP in the second quarter by itself. As we look at Japanese trade trends, July is starting the third quarter with the same forces as those in gear during the second quarter.

Strength though weakness… Seasonally adjusted exports were up by 0.5% over 12 months and that's a weak showing. However, imports are falling by 14.7%. That means imports are weaker than exports and it implies that the contribution from imports to GDP is going to be larger than the contribution of exports to GDP. Since imports are a subtraction from GDP, the weaker import number implies a positive kick to GDP, even as exports slow. Of course, we're very early in the third quarter and we're going to be concerned with the year-over-year change but what happens in the third quarter compared to the second quarter. In July itself, exports and imports each rose by 2% marking a sort of standoff in terms of their impact on GDP. But I simply do not see the rationale for being worried about Japanese growth because Japanese exports are weak. Global trade is weak. It looks like Japan is having weaker imports than exports which should be a positive development for Japan's GDP accounts.

Foreign exchange Japan's exchange rate against the dollar has deteriorated only slightly; based on year-over-year changes it's only 3.1% weaker. The real broad exchange rate that is trade weighted and price adjusted yen against all of Japan's trading partners is weaker by only 1.7% over the past 12 months. There is some evidence of growing weakness in the exchange grade from 12-months to 6-months to 3-months.

Export and import yen prices and volumes Export and import prices show export prices down 0.2% over 12 months. Import prices are down by 14.2% over 12 months. This means a lot of the weakness in imports has come on the price side rather than on the volume side. However, the volume statistics echo what we see in the nominal data as well with real exports growing by 0.8% over 12 months and real imports falling by 0.5%. Over 3 months exports fell at a 0.3% annual rate in real terms while imports fell at a 5.1% annual rate in real terms.
by:Robert Brusca
|in:Economy in Brief
United Kingdom| Aug 16 2023
The UK CPI and Its ‘Many Paths’
The United Kingdom is facing the same dilemma as other central banks as core inflation remains stubborn and headline inflation has dived sharply. The weakness in headline inflation has to do with its commodity components; we can particularly point to oil. On the other hand, core inflation, which shows some signs of moderating across most highly developed economies, shows a much slower progression, especially in the UK.
by:Robert Brusca
|in:Economy in Brief
Japan| Aug 15 2023
Trade Drives a Jump in Japan’s Q2 GDP to 6%
Japan's GDP in the second quarter of 2023 jumped to a 6% annual rate after gaining 3.7% at an annual rate in the first quarter. These two growth rates are a sharp breakout from the 2022-Q4 growth rate of 0.2% and the Q3 growth rate of -1.2% for real GDP.

However, on close inspection of the numbers, there's not much in this GDP report that is terribly impressive about the performance of the domestic economy nor does the domestic economy seem to be the source of inflation pressures.

The major GDP accounts Quarterly annual rates of growth show private consumption falling at a 2.1% annual rate with public consumption up at a 0.4% annual rate in the second quarter. Those are weak metrics. Gross capital formation produces a second positive growth rate in a row in the second quarter, rising at a 2.2% annual rate compared to the first quarter when it had grown at a 6.8% annual rate. Spending on capital equipment in the second quarter was up at only a 0.1% pace after a very strong 7.6% growth rate in the first quarter. Housing was strong, with real spending growing at a 7.7% annual rate, stepping up strongly from solid growth rates in the previous two quarters as the housing recovery continued. Net exports exploded in the quarter, rising by two trillion yen with the export/import gap accounting for all the quarter-to-quarter increase in GDP by itself. Exports grew at a 13.6% annualized rate after falling at a 14.4% annualized rate in the first quarter. Imports fell again at a 16.2% annualized rate after falling at an 8.7% annualized rate in the first quarter. Domestic demand fell at a 1.1% annualized rate after rising at a 4.6% annualized rate in the first quarter.

The active forces at work The sharp turn-around in GDP net exports has to do with the sharp reversal of exports in the second quarter along with the sharp reversal in imports as those two changes worked in tandem to magnify the impact on the current account balance (GDP-net exports). The contribution of net exports to GDP in the second quarter is greater than the increase in GDP on its own and the change in net exports from a deficit position in the first quarter is greater still. That change is being driven by some unexpected strength in exports, although exports, if we look at year-over-year data, are not performing in an exceptional way in the second quarter. Year-over-year export growth moves up to 3.2% in the second quarter compared to 1.9% in the first quarter, but that's still weaker than the export year-over-year growth rate in the third and fourth quarters of 2022. The main contribution of exports is that they jumped back to trend growth so quickly after having had a very weak first quarter. Imports, on the other hand, are showing some pronounced and sequential weakness; imports grew sharply in the third quarter of 2022, but after that they've declined quarter-to-quarter for three quarters in a row and they have logged progressively larger rates of decline. It's in the import growth rate where we see the real trend because year-over-year import are lower by 1.5% in the second quarter; they had been up by 4.1% in the first quarter, and in the previous two quarters, year-on-year imports grew at annual rates of about 10%. There is a clear import slowdown and contraction in progress linked to weak domestic demand conditions.

Strength though weakness- really! Japan's GDP report is basically a study in irony. Japanese GDP growth is strong because Japanese domestic demand is weak <- not a typo or a mistake. Domestic demand falls at a 1.1% annual rate in the second quarter with private consumption falling at a 2.1% annual rate and with public consumption weak at only a 0.4% annualized gain. Capital formation for plant & equipment also slowed sharply to only a 0.1% pace although gross fixed capital formation grew at a 2.2% annual rate and housing stepped up to log a strong growth rate at 7.7%. However, adding these all together, we get very weak domestic growth as is evident in the aggregate figure. Weak domestic demand means weak imports, explaining the sharp drop in imports that imparted a boost to GDP, hence strength though weakness! Meanwhile, exports picked up in the quarter and moved back to trend growth.

Year-on-year trends Year-over-year figures show relatively weak domestic demand growing at only a 0.9% annual rate in the second quarter, with private consumption growing at a 0.3% annual rate and public consumption also at a 0.3% annual rate. The capital formation figures and housing show growth rates in the neighborhood of 3 to 3 ½ percent per year. The year-on-year growth rate for GDP in the second quarter moved up to 2.1% from 1.9% in the first quarter and it was boosted by 3.2% increase in exports and once again - ironically – ‘helped’ by a 1.5% decline in imports, since imports are a subtraction from GDP. All things equal weaker imports produce stronger GDP.
by:Robert Brusca
|in:Economy in Brief
Finland| Aug 14 2023
Inflation in Finland Ends Its Tranquility; Is Finland a Bellwether?
The chart (on the left) is a reminder about how inflation works. This chart works for Finland; it works for most countries showing the tracking of overall inflation against oil prices. The chart shows current developments as well as some from 2016 and 2018 when oil prices flared and had a much more muted impact on overall inflation in Finland. However, the spike in oil prices in 2021 has added to other factors and had a substantial impact on inflation; meanwhile, the subsequent runoff in Brent prices preceded the deceleration of inflation in Finland as well as globally.

Once you have those results, it's instructive to look at what oil prices are doing currently. From the chart (on the right), we can see that the long run down in oil prices has finally bottomed and between June and August oil prices are once again rising. This plot of daily oil prices includes the European free market price of Brent as well as the U.S. domestic price for West Texas intermediate. This turnabout in crude prices suggests that some of the best news on inflation may be over at least for the headline.
by:Robert Brusca
|in:Economy in Brief
Italy| Aug 10 2023
Italian Inflation Trends Cool…Relatively
Italy's inflation metrics in July showed a headline for the HICP rose 0.3% after falling 0.2% in June. The core rate was unchanged after rising 0.4% in June. The domestic CPI measure rose 0.2% in July after falling 0.1% in June. And the domestic CPI excluding food & energy rose 0.1% in July after rising 0.2% in June. These comparisons show that the HICP and the domestic inflation metrics for Italy had been behaving much the same in the last couple of months.

If we take a longer perspective, we find that we get pretty much the same readings and trends out of both the domestic CPI and the HICP gauges. For this discussion, I'm not going to repeat the HICP, and I will simply talk about the domestic CPI prices because they are the prices consistent with the detail in the table below.

Sequentially, Italy's CPI headline rises 6% over 12 months, eases to 1.9% pace over 6 months and then picks-up to a 3.1% annual rate over 3 months. The core measure gains 5.2% over 12 months, then slows to a 4.2% annual rate over 6 months and slides further to a 2.9% annual rate over 3 months. Italy's headline inflation rate appears to be cooling although it isn't doing it precisely sequentially; the core measure is showing a decline in inflation that is occurring sequentially.

Sequentially, the details on Italian inflation show broad deceleration occurring over 3 months and 6 months. Comparing 3-month inflation to its 6-month pace, only three categories show an accelerated pace; those are: rent & utilities, education, and restaurants & hotels. Over 6 months inflation is stronger than it is over 12 months in only three categories: alcohol & tobacco, transportation, and restaurants & hotels. Over 12 months compared to 12-months ago annual inflation is broadly hotter across categories; it's lower in only two categories: rent & utilities and transportation.

Calculating third quarter inflation by looking at the July increase over the quarter average in Q2, gives us a properly compounded annual rate of 2.0% for the CPI headline compared to 2.1% for the core CPI. The domestic inflation gauges are showing headline and core inflation running out of neck-to-neck pace that would be completely in-lined with the ECB's 2% target.
by:Robert Brusca
|in:Economy in Brief
France| Aug 09 2023
French Trade Trends Show Deficit Contraction
French trade trends show slowing year-over-year patterns for both exports and imports of goods excluding military equipment. While both flows are decelerating, it's imports where growth has turned negative. Imports show negative growth rates over 12 months, 6 months and 3 months. Exports are slowing year-over-year; however, in terms of shorter-term trends, exports show growth of 4.3% over 12 months, growth at an annual rate of 5.3% over 6 months, and growth accelerating to an 11.9% annual rate over 3 months. This is an accelerating short-term pattern that defies its longer-term year-over-year slowing trend.

For exports, the three-component flows depicted in the table {for 1) food, beverages & tobacco, 2) Transportation equipment, and 3) Other} all show positive trends. There are accelerations in progress from 12-months to 6-months to 3-months for all of them. From that standpoint, the strengthening of exports within the last year is a durable trend.

For imports, food, beverages & tobacco hint at some acceleration with very similar 6- and 12-month growth rates between 3- and 3½-percent that then accelerate to 9.6% over 3 months. Imports of transportation equipment, however, show waffling as they grow at a 12.4% annual rate over 12 months, slow to a 3.5% annual rate over 6 months, and then accelerate to a 10.4% annual rate over 3 months; that's a 3-month growth rate that's still below the 12-month growth rate and does not count as a tendency to accelerate. For ‘other’ imports, French trade results show declines on all horizons, but without any clear trend. Other import flows decline at a 13.7% annual rate over 12-months, that decline steps up to a -25.6% annual rate over 6 months, then it trims the speed of decline to -5.5% over 3 months. On balance, the ‘other’ category for French imports simply shows ongoing weakness but without a clear trend.

France’s current account in June swings into surplus after logging a deficit in May and rather persistent deficits in previous months. One year ago, imports outgained exports on a growth rate of 35.8% for imports compared to 20.7% for exports. However, over the last 12 months, that worm has turned, and imports are falling at a 9.2% annual rate, while exports have advanced at a 4.3% annual rate. The changes in these growth rates are what underline the swing in the current account from deficit territory into surplus territory. France’s trade balance continues to be in deficit in June. However, the deficit in June is only about 60% the size of the deficit averaged over the last 12 months.
by:Robert Brusca
|in:Economy in Brief
Japan| Aug 08 2023
Japan’s Economy Watchers Index Waffles Higher
Japan's economy watchers index moved up to 54.4 in July from 53.6 in June. Six of nine of the component readings improved month-to-month. The sector readings did not improve on the month for eating and drinking places, for services, or for housing.

The future index also improved month-to-month, rising to 54.1 in July from 52.8 in June. Only one component reading in the future index backed off month-to-month; that was for manufacturers.

Over 12 months and over six months, all the point-to-point changes are positive in the current index; however, over three months we see a decline in the headline as well as in five of the components. Over 3 months, there's weakening in households, eating and drinking establishments, services, nonmanufacturers, and in employment overall.

The future index shows similar results. Over 6 months and 12 months, the headline for future readings and components all improved. However, over 3 months the future reading is lower and five of its individual readings are lower as well. The 3-month change in the future readings is lower for households, retailing, services, manufacturers and employment.

However, the economy watchers indexes have come a long way. The survey is a diffusion index so that it's queue standings have substantial meaning. The current index has a 94.1 percentile standing on data back to 2002 and the future index has a 92.5 percentile standing; both of these readings are quite high even though they derive from diffusion values with readings of only 54.

In the current index, the strongest readings are for households, in the services sector, for retailing, for eating and drinking places, and among corporations for nonmanufacturers. The weakest queue standings are in housing, for employment, and for manufacturers.

The future index shows its strongest readings with 90th percentile standings or higher: eating and drinking places, retailing, services, households, nonmanufacturers and corporations overall. The weak readings in the future index are housing, employment and manufacturers. The weakness is in the same sectors as those that lag the most in the current index.
by:Robert Brusca
|in:Economy in Brief
Germany| Aug 07 2023
German IP Heads South...
Despite a previously issued strong orders report (a report that is summarized in the table below), German industrial output backtracked in June, falling by 1.5% month-to-month after falling by 0.1% in May. More broadly, the sequential growth rates show German industrial output lower by 1.8% over 12 months, rising at a 1.7% annual rate over 6 months and then falling at a 5.2% annual rate over 3 months.

In the current month, sector activity in Germany is mixed with consumer goods output rising 1.8%, capital goods output falling 3.9%, and intermediate goods output rising by 0.4%. This pattern of increases and declines is completely the reverse of what each industry reported in May.

Looking at industries over a broader sequential framework, consumer output accelerates from -0.8% over 12 months, to a smaller 0.2% negative growth rate over 6 months, to a solid 7.6% annual rate of increase over 3 months. Capital goods, however, head any other direction. Capital goods output rises by 4.3% over 12 months, declines at a 2.5% annual rate over 6 months, and then declines faster, at a 5.6% annual rate over 3 months. Intermediate goods show a chaotic pattern with output falling 5.4% over 12 months, log a strong 8.2% annual rate gain over 6 months, and then fall at a 2.9% annual rate over 3 months.

The construction sector also shows a chaotic pattern. Construction output fell by 2.7% in June after increasing in May and April. Construction output is down by 1% over 12 months, rises at nearly a 17% annual rate over 6 months, and then collapses to fall at a 3.2% annual rate over 3 months. There is no pattern there.

Manufacturing alone shows a 1.2% drop in output in June after smaller increases in both May and April. Manufacturing output has a chaotic pattern with a 0.4% fall over 12 months, a 1.5% annual rate of increase over 6 months and a 2.5% annual rate of decline over 3 months. The orders figures for manufacturing are strong as we reported earlier with explosive growth rates culminating in a 68.1% annual rate over 3 months. Big-ticket orders in the aircraft sector are responsible for most of that strength. In contrast to the strong orders, real sales in manufacturing fell in June by 1.6% after rising in May and falling in April. Their pattern shows a steady menu of increases, but the 0.4% rise over 12 months eases to zero over 6 months and then accelerates to 6.1% over 3 months. That's a small deviation from what would otherwise be an accelerating pattern.

Other manufacturing gauges for Germany show the ZEW current index weakening sharply in June and weakening from April to May to June while that same index shows improvement from 12 months to six months to three months. The IFO manufacturing gauge shows a steady slippage from April to May to June, but from 12-months to 6-months to-3-months the IFO is firm. IFO’s manufacturing expectations survey slipped decidedly from 96.6 in April, to 90.7 in May, to 84.1 in June. However, the progression from 12-months to 6-months to 3-months shows a step up from 12 months to 6-months and then a small step back from 6-months to 3-months. The EU Commission industrial gauge also shows monthly slippage April, to May, to June, and it shows a confirming slippage from 12-months to 6-months to 3-months. Germany's industrial indicators show us some mixed patterns with a good deal of weakness trending over the last 3 months but with more substantial firmness generally from 12-months to 6-months to 3-months.

Manufacturing in select other European countries shows widespread weakness with declines in output from France, Spain, and Portugal in June, while Norway posted a flat performance. All these countries showed increases in May and three of the four had declines in April. Rates from 12-months to six-months to three-months show a chaotic pattern in France as well as in Spain. There are persistent declines in Portugal that border on deceleration. Norway shows positive growth rates on all horizons; there is only a modest tendency toward strengthening.
by:Robert Brusca
|in:Economy in Brief
Germany| Aug 04 2023
Sharp Rise in German Orders Generated by Foreign Sector
German orders surged in June rising by 7% after gaining 6.2% in May and after rising 0.2% in April. This is a particularly strong stretch for German orders. Orders are being pushed ahead by the foreign sector as foreign orders grew 13.5% month-to-month in June after rising 6.8% in May. Domestic orders fell by 2% in June after rising 5.3% in May.

Sequential trends Sequentially, German orders are accelerating, growing by 2.9% over 12 months, rising at a 13.6% annual rate over 6 months then exploding at a 68.1% annual rate over 3 months. This profile is engaged to some extent by both foreign and domestic orders, but it clearly is being driven by foreign orders. Foreign orders rise 8.6% year-over-year, advance at a 30.8% annual rate over 6 months, and then skyrocket at 108.8% annual rate over 3 months. In contrast, domestic orders over 12 months fall by 5%, and then they weaken further, falling at a 7.8% pace over 6 months; however, over the most recent 3 months domestic orders turn around and grow sharply at a 21.7% annual rate.

An unexpected -and probably not lasting- surge in orders The strength in orders Germany experienced in June has come from large orders substantially related to the aerospace industry mostly concentrated from fellow members within the European Monetary Union, augmented by moderate strength from outside the Monetary Union as well. The surge in German orders saw large new product orders rise sharply in June; excluding this surge, new orders fell by 2.6% month-to-month. Orders from other European Monetary Union members grew sharply in June, rising 27.2% on strong demand from the aerospace industry. Foreign orders from outside of the euro area were solid, rising 5% month-to-month. In contrast, German domestic orders languished, and fell on the month.

Just-completed Q2 Despite this strength, in the quarter-to-date (just completed Q2), orders are rising only 0.9% at an annual rate with foreign orders falling at a 0.4% annual rate and domestic orders rising at a 3% annual rate.

Real sales are pedestrian Real sales across sectors exhibit declines everywhere in June. The sector weakness is surprising in view of the strength in orders. For manufacturing, the sequence of growth rates shows a 0.4% gain in real sales over 12 months, flat performance over 6 months, and a 6.1% gain over 3 months. Over 3 months, mining & manufacturing real sales are up by 6.6% at an annual rate; consumer sales fall by 2.4%, with consumer durable sales extremely weak. Capital goods sales rise strongly at a 22.1% annual rate over 3 months, but intermediate goods sales fall at a 6.7% annual rate over 3 months. In the quarter-to-date, real manufacturing sales are rising at a 1.9% annual rate.

Industrial confidence in EMU’s largest economies EU industrial confidence shows worsening. The confidence for Germany, Italy, and Spain, three of the four largest economies in the European Monetary Union, declined in June. France registers a -7.8 reading for industrial confidence in June, an improvement from its -9.2 reading in May, but clearly not enough to create an overall positive signal for France, Italy, and Spain taken together. Over the last 12 months, all four countries show weaker readings in June than they display over 12 months on average. Looking at point-to-point changes over 12 months, the German economy has fared the worst backtracking by 23.8 points over 12 months, compared to Spain losing 10.5 points, Italy losing 9.2 points and France shedding 7.7 points. These confidence measures when ranked on data since 1990 show lower 33- to 42-percentile rankings for all these countries. All the Big Four economies in the EMU have confidence readings below their respective medians- all are weak.
by:Robert Brusca
|in:Economy in Brief
Global| Aug 03 2023
Globally Total PMIs Slow But Continue to Signal Growth
The total or composite S&P PMIs for July saw worsening as the global PMI is worsening, emerging markets are worsening, developed markets are worsening and are the weakest of all. This follows a similar performance in June when all three groups showed deterioration although May showed improvement for all three groups.

Sequentially, over 3 months, all three of these groups are worsening, over 6 months they're all improving, and over 12 months the overall and developed markets are worsening while emerging markets are improving.

The queue percentile standings show the global PMI with a 42.9 percentile standing, marking it below its 50th percentile and therefore below its median. The HSBC emerging market index has a 67.3 percentile standing, nudging it up into the top one-third in terms of historic standings. Developed markets have a 24.5 percentile standing, sending them to the bottom quartile of their range. This matrix of data portrays overall poor results for the global economy.
by:Robert Brusca
|in:Economy in Brief