Economy in Brief

The registered unemployment rate in Germany in December ticked up to 5.9% after logging 5.8% in October and in November. The registered rate has been moving up slowly throughout the year. The number of people unemployed increased 0.2% in December, a slowdown from the 0.8% rise in November and the 1.1% increase logged in October. Over 12 months, to six months, to 3 months, the annualized increase in unemployment is rising at a faster rate, as it has increased by 7.4% over 12 months, at a slower 7% pace over six months, then reaccelerated to an 8.6% annual rate over three months.

Wages in Germany lag behind the unemployment statistics and are up-to-date through October. On that cut-off date, the 3-month change in wages shows a drop at a 4.4% annual rate although wages are still up by 4.6% over 12 months. Real wages are up by 0.9% over 12 months but down at a 7.3% annual rate over the last three months. With the unemployment rate rising, there is less support for the labor market and wages are showing that weakness.

The manufacturing global PMIs from Standard & Poor’s show deterioration in December compared to November as 2023 draws to a close. The median reading among countries in the table is 47.9, a level below 50 indicating contraction in the manufacturing sector as represented by the median standing. The median in December also declined from its value in November, which was 48.3. In November, previously, the median PMI had declined from its 48.7 reading in October. Slow but steady erosion is still in train over these two months.

Looking at data more broadly over 12 month, six month and three month periods, there's very little change in the median. The median for the 12-month average is at 48.7; that increases to 48.8 over six months but then falls back to 48.4 over three months. The median over these periods has actually been trapped at a low reading below the 50% mark, indicating moderate contraction. There's been a persisting situation over the last year that shows slight erosion and it has not changed very much as the year has progressed.

In addition to the median, we can look at breadth; breadth tells us the proportion of readings with improving or deteriorating trends over some set period. Over 12 months compared to a year ago, the diffusion statistic is 61.1. Since it's over 50, it indicates that more than half of reporting countries were showing improvement on that timeline. Over six months compared to 12 months, diffusion falls to 55.6. That depicts reduced breadth, but it still shows that over half of the reporting countries were improving over six months compared to 12 months. Over three months, the breadth figure falls to 44.4%; this figure is below 50% and indicates that relatively more reporters are showing weakening readings over three months compared to six months.

Ranking data provide more perspective on what these readings mean. Breadth data summarize trends across all reporters. Ranking data evaluate each reporting unit agist its own recent timeline. The ranking data place the current month’s estimate in a queue of data from January 2019. This is a five-year period. Over this span, only five of the eighteen countries (or areas) from the table have standings above their 50th percentile, which means only five of them have standings above their historic medians. The highest queue standing is reported by Russia at the 98.3 percentile mark which is also its the strongest reading over this period. And because it's involved in war, this is probably not a truthful figure on Russia's part. Mexico has a 90-percentile standing. India has a 70-percentile standing; that's based on its November value. South Korea has a 58-percentile standing. However, the median for the group of 18 countries stands only at its 20.8 percentile, right at the lower fifth of its queue of reported data, obviously a very weak reading overall.

Vetting data from just before Covid struck from January 2020 to date, there are only four countries that report improvements in their manufacturing PMIs over this period. Russia, of course, reports the greatest increase at 6.7 points, Mexico shows a 3-point gain, Indonesia reports a 2.9-point gain, and South Korea shows a small 0.2-point gain. The median for the group is a decline of 1.8 points over this period.