Economy in Brief

Overview: “MIXED” at weak levels of activity- The S&P composite PMI readings for November continue to show a mixed bag of activity globally among the 25 national jurisdictions in the table. The average reading in November slipped to 51.7 from 51.9 in October; the median reading slipped 51.7 in November from 51.8 in October. There are 7 reporting jurisdictions with diffusion readings below ‘50’ indicating a contraction in overall economic activity in November, the same number as in October but down from a count of 12 in September. The breadth of slowing in November is at 44%, which is more slowing than in October, when only 24% of the reporters were slowing month-to-month. But both of those readings are much stronger than in September when 84% of the reporting units slowed down on a month-to-month basis.

Reading this table: In addition to summary data at the bottom of the table to provide some numerical benchmarking to the indications in the table (below), I use color-coding and shading to indicate other trends. The month-to-month or the period-to-period changes in activity are flagged by the word ‘better’ or ‘worse’ with ‘worse’ appearing in red and ‘better’ appearing in black to create an easier visual image of how countries are doing over these time horizons. Shading is used to reveal rankings below ‘50’ for diffusion data. Diffusion readings below 50 indicate contraction. At a glance, we can see that the weakness is really concentrated in the large western economies with the European Monetary Union, specifically, Germany and France, and sporadically, Italy, showing a proliferation of below ‘50’ readings. Sweden, Russia, and Australia have below ‘50’ readings in September but have since shaken those off in subsequent months. Zambia and Egypt have been consistently below ‘50’ readings and Nigeria is in that same club except for its 12-month average. Kenya and Ghana had a below ‘50’ reading in September but have since shaken those off.

Queue standings are WEAK! - The queue standing data take the diffusion readings and place them in a queue of data over nearly the last five years. The far-right hand column labeled “queue %” provides these standings. The benchmark here is that a standing of 50% identifies the median for the period so any reading above 50% is above its five-year median; anything below 50% is below its five-year median. I color-code these to make them easier to summarize at a glance with the below 50% readings in red in the above 50% in readings in black. Fourteen of the 25 readings have standings below their approximate 5-year medians. This weakness is concentrated in large economies with the U.S. as a clear exception having a 66.7 percentile standing, but the European Monetary Union, Germany, France, and Italy all have standings below their 50th percentile, as does the United Kingdom. In Asia, Japan and China have standings that are slightly below their respective 50th percentiles.

The bigger they are, the harder they fall? - The largest economies are having the biggest problem shaking off the weakness in the wake of COVID and in the wake of their COVID policies. Sequential data that compare three-month, six-month, and 12-month periods and the changes in activity over those periods show that the overall average has really been quite static although there is a very slight erosion in play with the overall average at 51.9 over 12 months slipping to 51.8 over six months and to 51.7 over three months. This is sequential hair-splitting weakness. The median values follow in step with a median of 51.3 for the 12-month average, slipping to 51.1 for the six-month average and staying at 51.1 for the three-month average of the cross-section median values. Over 12-to-6-to-3 months, the number of jurisdictions below ‘50’ fluctuates between 6 and 7; across these periods, there is not much change. Beyond the sequential movements of the average and the median, we can look at the percent slowing; the percent slowing has been creeping up. Over 12 months 43.5% of the reporting units are slowing, over six-months 60.9% of them are slowing, and over three months 78.3% of them are slowing. While the aggregate data on medians and averages show only a very slight erosion across jurisdictions, the count of areas where activity is actually slowing has actually been rising demonstrably.

Money growth is accelerating globally as money growth is positive over 12 months in all countries in the table as money supply completes the transition from contracting to expanding in the wake of the Covid disruption. European Monetary Union money growth is up by 2.6% over 12 months, U.S. money growth is up by 3.1%, U.K. money growth is up by 3.4%, and Japan's M2 plus CDs is up by 1.2% over the last year.

In the United States and the euro area both show money growth accelerating from 12-months to six-months to three-months. The U.K. shows fairly steady increases in the growth rate of money supply with a slight step down over six months; that then has speeded up over three months. Japan's money growth shows positive growth rates over each horizon without a clear trend developing from 12-months to 3-months.

In inflation-adjusted terms (or real terms), the euro area shows accelerating money supply growth. The U.S. shows the same trend with money growth picking up from 12-months to six-months and then holding that higher growth rate over three months. In the United Kingdom, real money supply growth is slowing - but only very slightly. Japan's real money supply growth shows contractions over 12 months, over six months, and over three months. Japan doesn't exactly show a trend but the declines over three and six months are deeper than the annual rate decline over 12 months.

The euro area shows positive credit growth in nominal terms over three months, six months, and 12 months. In real terms, the euro area shows positive credit growth over three months and six months, after shaking off a decline over 12 months.

The year-over-year chart of money growth shows some clear trends for money growth where the U.S., the euro area, and the U.K. demonstrate clear accelerating trends in money growth are underway. For Japan, money growth continues on a very long and slow decelerating path that dates back to 2021 and then shows a slight pick up the pace of deceleration in 2024.