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Economy in Brief
Japan's Inflation Shows Mixed Gains
Japan's inflation rose by 0.4% in July...
U.S. Existing Home Sales Continue to Fall in July
Existing home sales declined 5.9% (-20.2% y/y) in July to 4.810 million units...
U.S. Index of Leading Indicators Fell Again in July
The Conference Board's Composite Leading Economic Indicators Index fell 0.4% m/m...
U.S. Philly Fed General Activity Index Back to Positive Reading in August
The current general activity diffusion index rose nearly 19 points in August to 6.2...
U.S. Unemployment Claims Slightly Lower
Initial claims for unemployment insurance went down 2,000 in the week ended August 13 to 250,000...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Louise Curley May 31, 2005
Both business and consumer confidence in the Euro Zone declined in May as shown in the first chart. Consumers have been more pessimistic than businesses since October 2002. The percent balance between those consumers who were optimistic and those who were pessimistic reached a low point of -21 in March 2003. After improving through the rest of 2003, the percent balance has ranged between -13 and -15. The percent balance was at the low end of this range in May. The high unemployment rate in the Euro zone may account for much of the pessimism of consumers. The rate has ranged narrowly between 8.8% and 8.9% for the past year and a half.
Business confidence as represented by the percent balance of respondents in the industrial sector who believe conditions will improve over those who believe conditions will worsen declined to -11 from -9 in April. Although business confidence has been stronger--in that it has been less negative--than that of consumers since October, 2002, it has since declined sharply--from -3 in November of last year to -11 in May, a level last seen in August 2003. Among the more commonly cited causes of the decline in business confidence are the high and rising oil prices and the rise in the value of the Euro that are shown in the second chart.
Business confidence has been affected adversely by rising oil prices and the rising value of the euro. The recent history of both of these factors are shown in the second chart.
Euro Zone Confidence (Percent Balance) | May 05 | Apr 05 | May 04 | M/M dif | Y/Y dif | 2004 | 2003 | 2002 |
---|---|---|---|---|---|---|---|---|
Consumer | -15 | -13 | -15 | -2 | 0 | -14 | -18 | -11 |
Business | -11 | *13 | -5 | -2 | -6 | -5 | -10 | -11 |
Factors Affecting Business Confidence | Apr 05 | Mar 05 | Apr 04 | M/M % | Y/Y % | 2004 | 2003 | 2002 |
Brent Crude $/bbl.) | 52.22 | 53.13 | 33.15 | -1.71 | 57.53 | 38.22 | 28.80 | 24.89 |
Euro/US$ | 1.2957 | 1.2964 | 1.1947 | -1.99 | 7.95 | 1.3621 | 1.263 | 1.0487 |