Economy in Brief

U.K. industrial orders fell to -35 in November from -26 in October. The three-month average of the series is -26, weaker than its -20 6-month average and its -18 12-month average. Conditions in industry continue to deteriorate. The queue standing on data back to 1991 has orders weaker only 11.7% of the time. This is a weak headline for the CBI survey.

Export orders and the look-ahead to the next three months for output volume both weakened in November. Export orders fell to -31 in November from -23 in October. The outlook for output volume fell to -7 in November from +15 in October. Both export orders and the outlook for volume show ongoing worsening in their sequential averages.

However, price expectations are rising to +11 in November from +7 in October. That is still below September’s +14. And sequential averages from 12-months to 3-months show that diminished expected prices pressures have, up to this point, ruled the roost. Manufacturing output readings that lag by two months show progressive weakness, with output falling at a 7.1% annual rate over three months. Among the price expectations, manufacturing output trends, and volume expectations, there is evidence of weakening and of lingering inflation pressures. Prices have a 65.8 percentile standing, above their historic median. And despite its recent weakness, the year-on-year growth in manufacturing output has a 60-percentile standing, above its historic median. Some of the signals on growth and inflation remain mixed. Still, there is clear evidence of weakening in progress.

European car registrations showed a solid 3.5% month-to-month gain in October; the 3-month moving average rose 3% as well, indicating that there is trend rather than volatility to the increase. Sales/registrations rose month-to-month in three of the five reporting countries. Registrations were up strongly by 9.7% in Spain, up 1.9% in Germany, and edging ahead by 0.2% month-to-month in Italy. Registrations did backdown by 0.2% in October in the United Kingdom and fell month-to-month by 1.5% in France.

Registrations had fallen in three of five reporting countries in September but had risen in all five of them in August. As always auto registrations data are hard to pin down and remain a volatile source of information on consumer spending.

Over three months the annual increase in auto registrations is higher in three of five reporting countries; the exceptions are Germany and the U.K. where in each case registrations fall by 5.6% at an annual rate. However, in Spain registrations rise at a 97.5% annual rate over three months; in Italy they rise at an 82.9% annual rate over 3 months; and in France they rise at a 6.5% annual rate. Over six months the annual rate of growth is positive in all five reporting countries and the same trend holds over 12 months. The pace of sales generally accelerates over six months compared to 12 months with France being the sole exception to that phenomenon.

Year-over-year registrations gain anywhere from 18.5% to 20.4% in Italy and Spain to as little as 5.6% in Germany. But there are increases all around. The growth in sales approach leads to a quite strong and relatively broad and durable assessment of registration trends based upon the growth statistics over 3 months, 6 months, and 12 months as well as the monthly data. And the results for the growth in sales are relatively durable.

Assessing the sales pace, instead of its growth- However, a broader look at the table begins to uncover some evidence of weakness, for example, looking at the selling pace in October 2023 compared to January 2020, there's a decline of 8.6% for total registrations. In fact, there are declines in four of the five reporting countries with only France showing an increase in the pace of sales as of October 2023 compared to the sales pace in January 2020 before Covid struck.