Economy in Brief

Money supply growth is picking up globally except, of course, in Japan. In the European Monetary Area, money supply is up 0.6% over 12 months, it's up at a 2.1% annual rate over six months, and it's rising at a 2.8% annual rate over three months. Credit to residents in the European Monetary Area also is making a recovery, with 12- and six-month growth rates at 0.3% and with the three-month growth rate at an annual rate of 0.8%. Private credit is growing just slightly faster, with the three-month growth rate at 1.2% annualized.

In the United States, M2 money supply growth has accelerated from 0.6% over 12 months to 2.5% pace over six months and to a 4.2% annual rate over three months. Money growth in the United Kingdom, similarly, is accelerating from 0.3% over 12 months to 4.1% annualized over six months to 6.1% annual rate over three months.

Japan is the exception, with growth over 12 months at 1.8%, slowing over six months to a 1.6% annual rate and then slowing further over three months to a 0.5% annual rate.

Adjusted for the effects of inflation, money supply in the monetary union is gradually picking up as it moves from a decline of 1.9% over 12 months to an increase at a positive annual rate of 0.6% over three months. In the U.S., M2 growth is -2.6% in real terms over 12 months but flips the switch to grow at a 1.3% annual rate over three months. In the U.K., money supply M4 falls at a 3.3% annual rate over 12 months but then grows at a 2.5% annual rate over three months. Japan shows real money growth at -1% for 12 months, then at -0.4% over six months and at -3.1% annualized over three months.

German consumer climate as measured by the GfK index in July has taken a step back to -21.8 from a reading of -21 in June. However, the step up in June to -21 from -24 in May remains largely in place. The GfK climate index has been climbing, but it remains in substantially weakened condition with a queue- or count-percentile ranking at 9.8, indicating that it has been weaker than this only about 9.8% of the time.

The components of the GfK index lag and are available only through June. However, through June economic and income expectations readings weakened while the propensity to buy took a small step backward moving more deeply into negative territory. Economic expectations fell back to 2.5 in June from 9.8 in May while the income expectations reading fell to 8.2 from 12.5 in May. The propensity to buy retreated to -13 in June from -12.3 in May.

The components show economic expectations rank at their 42.6 percentile, still below their historic median. Income expectations are at a ranking of 43.0, a percentile standing also below its historic median (queue standing medians occur at a ranking of 50). The propensity to buy has the weakest standing among components at its 24.3 percentile.