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Economy in Brief

Euro Orders are Quite Firm Within the Zone but Extremely Strong for "Exports"
by Robert Brusca August 22, 2007

Euro area domestic orders are fine but are slower than export orders - both are accelerating over 3 months.

The UK alone (not a Euro area member) shows orders weakening but the CBI survey shows gains in August. We are left with a bit of uncertainty about Europe. But nothing has truly been weak apart from the episodic experience of things like UK orders weakening then rebounding. There are more substantial hints of slowing, but none of weakness. And during the liquidity squeeze the Euro has lost some ground, a factor that is good for Euro area growth prospects.

While there is some irregularity in the Euro area, Italy and France have showed the most consistent signs of weakness among large economies, although French industrial orders have emerged again as strong after some weakness. The ECB is under pressure to not hike rates and today the French finance minister proves there is at least a side and one-half to every argument, by making a case for a rate cut from the ECB. Yes I said (he said) ‘cut’.

Within the Euro area there is this odd result that domestic orders are softer while export orders are strong and accelerating strongly. Exports still undertake a national definition in these data. So export orders from Germany to a French firm would be export orders to France but would still reflect internal EMU orders. This sort of thing makes it a bit hard to sort out what is in train here. For now domestic orders are a bit weaker but are not suspect since they are accelerating, too. Europe’s slowdown may be in progress but it does not seem to be anything more serious than that.

Euro area and UK Industrial Orders & Sales Trends
Saar except m/m % m/m Jun-07 Jun-07 Jun-07 Jun-06 Jun-05
Euro area Detail Jun-07 May-07 Apr-07 3-Mo 6-mo 12-mo 12-mo 12-mo
MFG Orders 4.4% 1.5% -0.3% 24.5% 17.5% 15.5% 6.3% 5.4%
MFG Sales 0.9% 0.7% 0.3% 8.2% 7.2% 7.1% 7.7% 3.1%
Consumer 0.5% 0.4% 0.3% 4.9% 4.1% 4.8% 7.7% 3.1%
Capital 0.5% 0.4% 0.5% 5.7% 7.3% 8.2% 4.0% 1.8%
Intermediate 0.9% 0.7% 0.2% 10.7% 4.0% 10.6% 6.9% 2.7%
MFG Orders                
Total Orders 4.4% 1.5% -0.3% 24.5% 17.5% 15.5% 6.3% 5.4%
E-13 Domestic MFG orders 1.8% 0.5% 0.2% 10.7% 4.0% 10.6% 4.2% 0.9%
E-13 Foreign MFG orders 8.7% 3.7% -2.0% 48.4% 30.7% 23.1% 8.5% 9.1%
Countries: Jun-07 May-07 Apr-07 3-Mo 6-mo 12-mo 12-mo 12-mo
Germany: 4.7% 3.2% -1.5% 28.3% 27.2% 17.9% 9.7% 7.1%
France: 5.1% 2.6% 0.6% 38.6% 26.6% 8.4% -0.6% 9.6%
Italy: #N/A 2.5% -0.8% #N/A #N/A #N/A 10.1% 4.9%
UK: -1.7% -2.4% -6.7% -35.9% 12.2% -7.2% 10.2% -2.3%
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