- Monthly core price gain is strongest since January 2024; annual rise edges up.
- Real spending rose last month after sharp decline.
- Disposable income surges and savings rate strengthens.
by:Tom Moeller
|in:Economy in Brief
Europe| Mar 28 2025EU Indexes Show Slight Erosion
The EU commission's overall reading for the European Monetary Area unexpectedly eroded, dropping to 95.2 in March from 96.3 in February, leaving it also below its January 2025 level but above its December 2024 level. It may simply be too soon for this survey to reflect any of the changes going on in Europe. But very clearly a ramp up in military spending is planned and economic conditions in the monetary union and beyond are about to receive a significant boost. While that development might be simply too new to have gotten into the indexes as of March, it is still in train so curb your disappointment.
EMU in March by Sector March readings for the monetary union show the industrial sector unchanged at -11 from February but showing improvement compared to both the December and January readings. Consumer confidence slipped in March to -14.5 from -13.6 in February and it's below its January and December levels as well. Retailing slipped to -7 in March from -5 in February and it also is below its string of readings since December of last year. Construction spending at -3 posted the same reading it logged in February and in January and those were slight improvements from December. The services reading in March slipped to +2 from +5 in February and it is also below its reading of +6 in January.
Country Readings Country level data show readings for 18 of the monetary union members; of these 18, only 6 have percentile standings for overall indexes that are above their median (a ranking of 50%) calculated on data back to 1990. Only one of the four largest countries has a reading above its median and that's Spain at a standing at 51.4% Other large countries show much weaker readings with Germany at a 16-percentile standing, Italy at a 37-percentile standing, and France at a 37.5 percentile standing. Month-to-month changes show deterioration in nine of the 18 reporting countries. This compares to a deterioration in eight in February and compares to January when six weakened relative to December. It is a worsening trend but based on developments in military spending to shore up NATO. Europe supported defense systems must carry more of the load. This will imply stimulus across the board coming for the monetary union.
Global| Mar 27 2025Charts of the Week: Tariffs, Tensions, and Trade-Offs
Financial markets remain gripped by heightened uncertainty surrounding US trade policy, slowing US growth, and broader fears of global economic instability. Latest data suggest that the recent introduction of US tariffs has driven up manufacturing input prices and risks exacerbating supply chain frictions (charts 1 and 2). Looking ahead, investors are also increasingly assessing the implications of reduced global cooperation for US capital markets and the value of the dollar (chart 3). Still, notwithstanding recent concerns, there remain big question marks about the degree to which other major economies, including Europe and China, will act as a magnet for global capital in the period ahead. Energy costs, for example, remain a critical ingredient for economic competitiveness, and while the US continues to benefit from low electricity prices, Europe’s high energy costs are still acting as a drag on its growth prospects (charts 4 and 5). As for China, tentative signs of stabilization have emerged following recent fiscal loosening and targeted stimulus measures, which have helped buoy industrial output and credit growth. The government’s latest initiatives—centred on infrastructure investment, tax incentives, and efforts to support the property sector—have raised hopes of a turnaround, though structural headwinds, including weak consumer confidence and ongoing financial strains in the real estate sector, remain formidable. Whether China can sustain a more durable recovery will be a key factor shaping global capital flows, particularly as investors weigh the relative attractiveness of US and Chinese assets in an increasingly fragmented global economy (chart 6).
by:Andrew Cates
|in:Economy in Brief
USA| Mar 27 2025U.S. Pending Home Sales Increase in February
- Sales edge up from record low.
- Pattern of home sales is mixed across country.
by:Tom Moeller
|in:Economy in Brief
- Inventory drag on economic growth remains largest in almost two years; net exports add negligibly to growth.
- Sharp gain in consumer spending growth is revised down slightly, while the decline in business investment is lessened.
- Price index gain is revised down slightly.
by:Tom Moeller
|in:Economy in Brief
- The headline index increased to -2 in March from -5 in February.
- The index has not been positive, depicting growth, since September 2022.
- New orders fell more rapidly while shipments fell less rapidly.
- Employment continued to decline though at a slower rate than in February.
- Prices paid for inputs surged to highest reading since September 2022.
by:Sandy Batten
|in:Economy in Brief
USA| Mar 27 2025U.S. Goods Trade Deficit Narrows in February to $147.9 Billion after January’s Record High
- First narrowing in goods trade deficit since October.
- Exports rise 4.1% m/m, up for the third month in four, led by a 12.7% rebound in auto exports.
- Imports fall 0.2% m/m after three straight m/m rises, led by a 4.9% drop in imports of industrial supplies & materials.
USA| Mar 27 2025U.S. Weekly Initial Unemployment Insurance Claims Are Little Changed in Latest Weeks
- Initial claims down 1,000 in March 22 week.
- Continuing claims 4-week average up just 2,000 in latest period.
- Insured unemployment rate holds at 1.2% since January 2024.
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