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Economy in Brief
German PPI Accelerates
The German year-on-year PPI has generally been decelerating since early 2017...
U.S. Leading Economic Indicators Signal Continued Expansion
The Conference Board's Composite Index of Leading Economic Indicators increased 0.3% during March...
Philadelphia Fed Factory Conditions Improve; Prices Jump
The Philadelphia Fed reported that its General Factory Sector Business Conditions Index rose to 23.2 during April...
U.S. Initial Claims for Unemployment Insurance Are Little Changed
Initial unemployment insurance claims slipped to 232,000 (-6.1% y/y) during the week ended April 14...
U.K. Retail Sales Fall
U.K. GDP is expected to cool its jets when the first quarter GDP number is released...
by Robert Brusca May 9, 2008
France remains a quintessential e-Zone economy. Its consumer
sector has gone slack but capital goods output is still churning up a
storm. Still capital goods is lagging sector. Its output can tend to
stay strong as its industries turn out goods that are legacy of strong
demand earlier in the cycle; it can lag in recovery as well, as demand
for new equipments waits on the moment that new capital constraints are
encountered. Capital goods is lagging sector in the economy. For this
reason I do not take its ‘enduring strength’ as sign that it will
bootstrap the rest of the economy into expansion.
The chart above shows the longer term relationship between
consumer goods and capital goods output trends in France. History also
tells us that the weakness in the consumer sector is something to be
wary of – the sector tends to be a harbinger.
The banking sector problems in Europe and in France, the
strong euro exchange rate, the slippage in various domestic surveys,
give us even more reason to be wary of what has been ongoing strength
in the capital goods sector. It seems to have become a sector with
increasingly poor fundamentals despite its resilience.
French IP Excluding construction | |||||||
---|---|---|---|---|---|---|---|
Saar except m/m | Mar-08 | Feb-08 | Jan-08 | 3-mo | 6-mo | 12-mo | Quarter-to-date |
IP total | -0.8% | 0.5% | 0.4% | 0.0% | 2.1% | 1.0% | 1.4% |
Consumer | -0.8% | 0.2% | 1.7% | 4.4% | -2.3% | -1.6% | 2.1% |
Capital | -1.1% | 2.0% | 0.0% | 3.7% | 5.2% | 4.9% | 4.7% |
Intermed | -1.7% | 0.4% | 1.2% | -0.4% | 0.4% | -1.1% | 2.0% |
Memo | |||||||
Auto | -2.9% | -2.1% | 1.1% | -14.6% | 2.8% | -1.0% | -1.0% |