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Economy in Brief

EMU Industrial Production Held Firm in April
by Robert BruscaJune 10, 2008

Industrial output has held firm-to-strong in most of the large EMU countries in April. France shows strengthening IP trends. In Italy the three- and six- month growth rates are just above 2%. Spain’s numbers are simply too volatile to tell. They are on a strong upswing in April (see table) but only after showing some extreme weakness in their March trends (also in table). In the UK, output continues to edge higher. But Germany, surprisingly, shows the weakest trends in April. At -0.7%; Aprils 3-mo growth rate for Germany is now at -4.1% below the +3.3% six month pace and the +5.7% Yr/Yr pace.

This divergence points up the erratic and out of step nature of these economic trends. Germany alone shows a clear decelerating pattern for output but gives mixed signals for industry overall. Germany boasts still strong exports but also dropping production and fading – but still growing – industrial order books. And despite growth in industrial output in other EMU countries, German export orders were dropping the most in other EMU countries, too. So that is yet another mixed or inconsistent signal.

As the EMU’s largest economy Germany has supported growth in adjacent EMU members. For the time being, other EMU countries continue to register growth in April. Still, there is little sign of vigor. The European consumer is still struggling and we know that the strong euro, financial distress and spiking energy prices are continuing to take a toll. The capital goods sector continues to be the mainstay of growth in Europe. But growth overall seems to be challenged despite the spate of firm industrial output numbers reported out by the UK, Italy and France today. The risk is that Germany’s slowdown is the vanguard and weakness in the other countries will follow.

Main E-zone Countries and UK IP in MFG
  Mo/Mo Apr
08
Mar
08
Apr
08
Mar
08
Apr
08
Mar
08
 
MFG Only Apr
08
Mar
08
Feb
08
3Mo 3Mo 6mo 6mo 12mo 12mo Q-2-
Date
Germany: -0.7% -0.3% 0.0% -4.1% 3.6% 3.3% 4.4% 5.7% 5.0% -5.4%
France: IP excl Construction 1.4% -1.0% 0.5% 3.4% -0.8% 0.8% 1.9% 3.2% 0.7% 5.4%
Italy 0.6% 0.0% -0.1% 2.1% 7.0% 2.1% -1.2% -0.1% -1.8% 3.6%
Spain 27.0% -16.9% 2.6% 37.5% -40.3% 10.9% -20.4% 11.5% -13.8% 106.3%
UK 0.2% -0.5% 0.4% 0.4% 1.2% 0.4% 1.0% 0.1% 0.5% 0.0%
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