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Economy in Brief

INSEE Biz Indicator is Weakening
by Robert Brusca May 27, 2008

The INSEE survey of business sentiment is lower in May, as the overall index fell to 102 from 106 in April. The index (blue line) has been moving sideways until early this year. The four point drop is the sharpest since April of 2005. Still the climate index is above its average (since 1990) by one point. And still resides in the upper portion of its range, 58th percentile. The recent trends put it at a raw reading of -15, well below the average at -5, ensconced in the 42nd percentile of its range. The likely trend, however is extremely strong standing in the 84th percentile of its range. That one is surprising since other readings hardly seem to justify it. Overall orders and foreign orders are in about the 58th percentile of their respective ranges. Price expectations are high, in the 78th percentile of their range and well above average.

French president Sarkozy is asking the EMU to put a freeze on the VAT on fuel. Since the VAT is a percentage tax it boosts the price of fuel further each time overall oil/fuel prices rise on world markets. Fuel costs in EMU are already at extreme levels. France has been suffering though a wave of protests over high fuel costs. In the UK a protest was made along the M4 by freight haulers wanting a VAT rebate as essential users for the high fuel costs. Energy costs are clearly out of hand when we see this sort of thing.

For some reason haulers and other businesses do not think they are able to pass on high fuel costs to end users. While that may be good for the inflation fight it raised questions about growth prospects.

INSEE Industry Survey
          Since Jan 1990 Since Jan 1990
  May-08 Apr-08 Mar-08 Feb-08 %tile Rank Max Min Range Mean
Climate 102 106 108 107 58.0 105 123 73 50 101
Production
Recent Trend -15 -7 -6 -9 42.2 138 44 -58 102 -5
Likely Trend 48 48 52 43 84.4 5 63 -33 96 9
Orders/Demand
Orders & Demand -11 -5 1 -1 58.6 90 25 -62 87 -14
Fgn Orders & Demand -7 3 1 1 57.3 94 31 -58 89 -10
Prices
Likely Sales Price Trend 14 14 12 16 78.7 20 24 -23 47 1
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