· Europe’s recovery remains on track in November as industrial production has risen in all the large EMU states. The UK, an EU member, only saw a very minor set back to MFG IP with output dropping by 0.1% in November. Of the largest EMU states, the rise in the Italy was disappointing at just 0.2%. The UK’s small drop actually out did expectations.

· Year-over-year the IP drops have been trimmed to the range of -4% to -10% for this group of countries. Despite the set back to UK IP in November at -5.4% it demonstrates one of the smaller Yr/Yr drops in IP and exhibits a strong improvement from its result in October (-7.8%, Yr/Yr). All large countries show an improvement in their Yr/Yr drop in November compared to October and for most the difference is large.

· The chart above shows how strong the recoveries have been. Despite all that strength over the last 3- and 6-months, 2009 has been a very bad year for Europe.

· German GDP is just reported to have posted an outsized drop of 5% in 2009 as its exports and investment goods sectors were hard hit. As it was, government programs produced a boost that kept the steep GDP decline from being even larger. Public consumption rose by 2.7% from 2008 while private consumption edged ahead by just 0.2%.

· The recovery in IP is however a good development. Germany’s industrial sector depends on exports which fell by 14.7% in 2009. Exports have begun to get traction again and IP is on the rise as a result. 2010 promises to be a much better year, but then 2009 put all of Europe in a very deep hole and the real question is not 'Will 2010 be better?' but, 'How much better will 2010 be?' That is not yet resolved and is a point of some contention. So far, good strong growth is in train and seems to have staying power. Perhaps more optimism is warranted.