Economy in Brief

Retail sales in the European Monetary Union (EMU) in July rose by 0.1% after falling 0.4% in June and rising 0.1% in May. The 0.1% uptick in retail sales volumes is, of course, quite marginal and it comes amid a cluster of other weak readings. The 12-month growth rate of sales volumes is zero. The annualized growth rate of volumes over six months is 0.6%; the annualized change in volumes over three months is -0.8%. EMU retail sales obviously are weak and have been weak for some time - the volume statistics are quite disappointing.

QTD sales volumes fall In the quarter-to-date, euro area retail sales volumes are falling at a 0.8% annual rate. Of course, it's early in the quarter as it's only July, but that figure represents the July growth rate over the Q2 centered average level of retail sales in the second quarter period - it's a poor start to the third quarter.

Food for thought; some for growth Food and beverage sales indicate slightly better results with still erratic sales over the last three months, but food and beverage volume sales from 12-months to six-months to three-months are transitioning into growth and even into acceleration. And the quarter-to-date food and beverage volume statistics are rising by 1.3% at an annual rate.

Motor vehicle registrations have run out of gas Motor vehicle registrations fell by 3.6% in July after rising by a robust 7.1% in June which followed a 10.8% plunge in May. These statistics have been quite choppy and once again are not reassuring. The sequential growth rates reveal motor vehicle sales to be even worse as they are decelerating and imploding. Motor vehicle registrations over 12 months are falling at a 0.3% annual rate, but over six months they're falling at a 13.8% annual rate and over three months they're falling at a 28.2% annual rate; these are far from reassuring trends. In the quarter-to-date, motor vehicle registrations are falling at a 16.7% annual rate.

European country-level sales look better Turning to retail sales volumes across the monetary union and other European countries, we find a proliferation of month-to-month sales increases in July. Eight countries are listed in the table, only one of them, Portugal, shows a volume decline in July while Denmark has unchanged results, and the rest show gains. However, these numbers are coming from June in which five of these countries showed declines month-to-month, while in May only one country showed a month-to-month decline, which was Spain.

Sequential growth across countries Over three months most of the countries in this table show sales increases; there's one exception over three months, Norway, with sales volumes declining 1.7% at an annual rate. Over six months all countries show increases except the Netherlands and Belgium. Over 12 months increases are posted in five of these reporting countries with three of them showing declines. The declines are logged by Belgium, which has a 4.6% decline over 12 months, by Sweden, which has a 0.8% decline over 12 months, and by Norway, which has a 0.5% decline over 12 months. Among the countries in the table, only Sweden’s sales volumes accelerate and there the acceleration is not very impressive, from -0.8% over 12 months to a growth rate of 0.2% over six months, to a pace of 0.9% at an annual rate over three months. While some European countries are showing more solid and consistent growth rates in retail sales such as Spain, Portugal, Denmark, and the United Kingdom - all of which show sales increases over each of the horizons - in general, sales growth has not been impressive. The year-over-year growth rates are strongest for Denmark at 3.9%, the Netherlands at 3.4%, followed by Portugal at 2%. These are all volume growth figures and so they are relatively impressive in their own right, but for the most part, acceleration in sales volumes is not underway.

Quarter-to-date trends In the quarter-to-date, only two of these countries showed declines in progress and that's Portugal the 0.9% annual rate decline in the quarter-to-date and Norway with a 7.1% annual rate decline in the quarter-to-date. The strongest growth percolating in the quarter-to-date is the Netherlands at 5.4%, Belgium at 4.6%, the U.K. at 4.2%, and Spain at 4.2%. So, there is some life in some of these reporting countries in retail sales, but the trick will be to see if these trends are able to hold up and extend themselves.

Very weak since COVID struck Putting these sales trends in a broader perspective, we look at their percentage changes since just prior to COVID's arrival. Calculating growth back from January 2020, we're looking at a period of about 4 1/2 years. Over that span, Belgian sales are still lower by 8.8%, Sweden’s sales are lower by 2%, in the U.K. sales are lower by 1.9%, in Norway they are lower by 2%. Sales are higher by 3.1% in the Netherlands, and by 3% in Spain; they're higher by 1.3% in Denmark. The data for Portugal don't extend back that far. However, these are poor results. For the euro area, sales volumes are up by 1.9% over this span - less than one-half of one-percentage point per year on average. Food and beverage volume sales are lower by 1.5%. In addition, auto registrations over this period for the EU-15 countries show a decline of 15.9%. The consumer has been a weak force for growth during this period. And it's not surprising since COVID struck, then there was the outbreak of war as Russia rolled into Ukraine.

Standard and Poor’s composite PMI readings for August improved globally in 19 of 25 reporting countries. This widespread improvement showed far better improvement in breadth than what has been registered by manufacturing sectors among countries that report those data.

The August result was far better than July when only 10 of 25 reporting countries improved month-to-month. Similarly, June was a weak month with only seven composite PMIs improving month-to-month.

Despite the strong improvement in August, the three-month average finds improvement compared to six-months ago in only 7 reporting units. However, the sequential averages also have a stronger history as the six-month average shows that only 6 reporting units were weaker compared to 12-month averages. The three-month comparison is to a six-month period that saw broad gains. Even so, the 12-month comparison to 12-months ago shows improvement in only 12 of the reporting units, approximately half of them.

Over 12 months, most large/developed economies performed worse including the United States, the European Monetary Union, specifically, Germany, France, Italy, and Spain, as well as Japan. China worsened as well. The United Kingdom was an exception, improving over 12 months compared to 12-months ago.

The unweighted average PMI readings for a group, consisting of the U.S., the U.K., and the European Monetary Union, shows steady improvement from June, to July, to August. Despite uneven sequential results the unweighted average PMIs also have improved from their 12-month averages to their six-month average, to their three-month average.

The BRIC countries excluding Russia (BIC) show steady monthly improvements and show consistent, strong readings above or just below the 55 mark for over three months, six months, and 12 months.

The overall averages of the PMI readings show a tendency to increase but not a clear sequential move in that direction. The overall median readings show the same general reading and trend.

On a composite PMI basis, the number of areas with readings below 50, indicating overall economic contraction, have been reduced to four in August. They total 4 over three months and six months compared to 6 over 12 months. Few economies are showing overall contraction on this measure. While there were as many as eight contracting in July and in June, generally over three and six months the number showing contraction has been small.

The far-right hand column gives the queue percentile standings which place the August readings in an ordered queue of standings in the last 4 ½ years of data. These readings show 12 reporters with current standings below the 50% mark. A reading below 50 would put them below their median over this span. The average reading for the entire group is for a queue standing at 51.8% while the median is at 51.0%. Over this period the 12 readings that are below 50% are simply below their respective medians reading; they do not indicate contraction because these are rankings based on queue standings rather than diffusion data as in the first six columns of data in the table.