Economy in Brief

The monthly view: The S&P composite PMIs in March show some continuing but slow improvement. The average for the 24 countries listed on the table moves up to 52.4 in March from 52.0 in February and 51.5 in January. The median moves up to 52.7 in March from 51.3 in February and 50.7 in January. Both the mean and the median progressions show ongoing improvement. Statistical agreement is a beautiful thing. The number of jurisdictions showing composite PMI values below 50 numbered 11 in January, fell to 9 in February, and to six in March. Fewer countries listed in this table are showing overall declining economic activity. In addition to that, few are showing a slowing tendency. Month-to-month changes show only 40% were slowing in January, only 32% were slowing in February, and only 44% of the reporters slowed in March compared to February. The monthly changes are constructive but not dramatic.

Sequential profile: The sequential changes look at 12-month, to six-month, to three-month changes; they show that averages have risen from 51.6 for the overall, to 51.3 over six months - slightly weaker- and then advancing to 52.0 over three months. The median over 12 months is 51.7, that slips to 50.7 over six months and recovers to 51.8 over three months, just slightly above the 12-month average. Neither the average nor the median shows a steady progression towards improvement, but both show a slightly better reading over three months than over 12 months although the margins of improvement are small. The number of jurisdictions showing declining activity over 12 months is 8, that moves up to 10 over six months and down to 7 over three months. The number of jurisdictions growing slower was over half for 12-months and six-months; over 12 months at 65% slower, and even higher proportion of 78.3% showed slowing over six months compared to 12 months. Over three months, the proportion slowing pulls back sharply to only 34.8%. We see in these trends both the tendency for the PMI to show fewer declines and for the breadth of weakness to pull back over the past year.

Queue standing- These improvements have had an impact on the queue standings as well. The average queue standing is now at 53.8% with the median at 55.1%. The medians for the composite PMIs are above 50% which means they're above their median values over the last four years. Out of the 24 reporters, only 11 jurisdictions show PMI standings below 50 which means below their median.

The Weakest vs. the Strongest- The weakest standings in the table in March are standings in the 20th -percentile. Qatar, for example, registers a 20.4 percentile standing. Nigeria is at a 24.5 percentile standing. Germany has a 28.6 percentile standing, with France at a 30.6 percentile standing. The European Monetary Union has a 46.9 percentile standing. The United States has a 42.9 percentile standing. These data suggest that the improvement is not being driven by the large-developed economies. The highest percentile standing in the table belongs to India at the 98th percentile. Brazil has an 81.6 percentile standing. UAE reports an 87.8 percentile standing. Singapore has a 75.5 percentile standing and Japan notches a 73.5 percentile standing.

Just the facts ma’am- Inflation has overshot the European Central Bank's target (of 2%) for 33 months in a row. Now, with the unemployment rate in the Monetary Union at 6.5%, the lowest level it's seen since the Monetary Union was formed, the ECB is preparing to cut rates. REALLY!!

Curiouser and curiouser- I cannot stress enough what a curious situation this is, especially because the ECB, unlike the Federal Reserve, has a mandate that focuses only on inflation and has no reference to growth or to full employment or the unemployment rate.

Alice in blunderland? It's as though central bankers have stepped through the looking glass and found themselves in a world quite different from the one, they used to inhabit. Once, their principal responsibility was price stability. Suddenly, they seem far more infatuated with preserving low rates of unemployment that in the past proved to be (1) elusive, (2) sustainable, and (3) even dangerous, to pursue. “I was so much older then, I’m younger than that now?” (Dylan excerpt)

A new low in unemployment or policy judgement? The unemployment rate in the monetary union has been at 6.5% in 11 of the last 12 months. This is the lowest unemployment rate the monetary union has experienced in its existence. In October 2023, there was a hiccup in which the unemployment rate moved up to 6.6% for one month and then it moved back down to 6.5% - hence 11 out of 12 months at 6.5%- hic!

A festive labor market for all…almost all The table produces statistics for 12 of the oldest EMU members. It shows unemployment rate data ranked from 1994 to date. The unemployment rates for these twelve members are below their medians for every single member except for tiny Luxembourg whose unemployment rate stands at its 78.8 percentile and has been higher only about 21% of the time. By contrast, the monetary union has never seen an unemployment rate lower than this. Belgium has seen an unemployment rate lower than its current 5.5% only 7.6% of the time. Ireland has seen its unemployment rate lower than its 4.2% only 5.5% of the time. France has seen its unemployment rate lower than its 7.4% only 8.1% of the time… and so on. Unemployment rates across the monetary union, where they are not low in absolute values, they are low relative to each country's historic experience. For example, Greece has an 11% unemployment rate; it has been lower than that only 28.5% of the time. Spain's unemployment rate at 11.5% has been lower than that only about 24.4% of the time.