· In June French IP fell by 0.4%, unexpected weakness. It has now dropped in two of the past three months and is falling sharply in the current quarter, at a -5.3% annual rate. Italy, like France, has had a very weak May but managed some output increases in June. Still, Italy’s IP is dropping in Q2 as well. · The sequential growth rates in France shows a clear ongoing deterioration. This is what the OECD trend-adjusted leading indicators pointed to last week. France has more severe downward momentum that most other EMU nations.
· Italy’s path lower is more jagged with a rise in output over six months and an actual ongoing acceleration in the output of consumer goods, 12mo to 6mo to 3mo. This is very odd since the export markets seem to be declining for other EMU countries (like Germany) and Italy’s own domestic demand for consumer goods is quite weak. Still it may be that Italy’s consumer goods output is more volatile than it is strong. The recent monthly results have been extremely choppy.