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Economy in Brief

IP Sinking in All Sectors
by Robert Brusca February 13, 2008

All EMU industrial sectors are seeing a considerable decline in their rates of growth for industrial output. Capital goods has been a strong sector in Europe and we have seen orders for capital goods holding up especially in Germany. But on an EMU-wide basis capital goods output is now declining over three months and its growth rate year over year is declining as well. Consumer goods output has never really been strong in this recovery and now it is showing signs of decay from a low growth level. For the quarter industrial output is off by about one percentage point.

Among countries Germany is the strongest but even its growth rates show a deceleration in IP. France (excluding construction) is holding up a bit better than Germany, but with a weaker Yr/Yr rate of growth. Italy’s output shows a deep year/year decline for output. Spain shows a shallow Yr/Yr decline. The UK has been pretty flat for most of the past year.

For Q4 2007 Germany has the strongest contribution from IP at 3.4% Spain is next at 2.9% France is third at 1.1%. Italy has a strongly negative -10.4% IP contraction in Q4. The UK has a small 0.5% subtraction as IP sides in the fourth quarter.

Despite some stirring the Zew Survey for Germany we also saw that the Zew current conditions assessment is sliding. A pick up in sentiment for the future hangs on some rate cuts by the Fed, the potential for more and a US stimulus package that has just been passed into law. But the future remains cloudy and current conditions are still very weak, and in some cases, getting weaker.

Euro Area and UK IP and MFG
Saar except m/m Mo/Mo Dec-07 Dec-07 Dec-07  
Euro Area Detail Dec-07 Nov-07 Oct-07 3-Mo 6-mo 12-mo Q-2-Date
MFG 0.0% -0.5% 0.6% 0.2% 1.3% 1.1% -1.0%
Consumer 0.1% -0.5% 0.3% -0.9% 0.3% -0.2% -2.3%
Consumer Durables 0.0% -1.9% -0.1% -7.8% -4.9% -4.0% --
Consumer Nondurables -0.1% -0.2% 0.2% -0.4% 0.8% 0.2% --
Intermediate 0.3% -0.7% 0.6% 0.5% 0.6% 0.2% -1.5%
Capital -1.0% -0.2% 1.0% -0.7% 2.4% 2.5% 0.5%
Main Euro Area Countries and UK IP in MFG
  Mo/Mo 105.2 105.2 105.2  
Memo: MFG 1-Mo% 1-Mo% 1-Mo% 3-Mo 6-mo 12-mo Q-2-Date
Germany: 0.9% -0.2% 0.0% 3.0% 6.1% 5.3% 3.4%
France: IP excl Construction 0.7% -1.7% 2.0% 3.9% 3.3% 1.2% 1.1%
Italy -0.5% -1.7% -0.8% -11.5% -6.7% -6.4% -10.8%
Spain -1.5% -6.7% 10.2% 5.5% -3.3% -0.3% 2.9%
UK -0.2% -0.1% 0.3% 0.0% -0.8% 0.0% -0.5%
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