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Economy in Brief

EMU Area IP Growth Confirms the Strength Across Countries
by Robert Brusca June 12, 2008

In April EMU-wide industrial output rose by 0.3% but that was after a drop of 0.6% in March. While the Yr/Yr growth rate seems a lot higher at 2.9% in April compared to 1.4% in March, growth is actually fading. The monthly gain in April does not make up for the weakness in March. As a result the quarter to date growth in EMU-wide IP is running at a negative rate of 0.3%, a slight annual rate decline in 2008-Q2.

Consumer goods output is dropping at -0.5% annual rate clearly the weak sector in 2008-Q2, despite a sharp gain of 1.7% in April. Intermediate goods output is nearly flat and has been choppy in recent months. Capital goods output remains as it has been, the driver of industrial growth, rebounding sharply by 2% in April after a 1.6% drop in March and growing at a 6.5% annual rate in 2008-Q2.

The chart on the left shows that this month’s rebound in output comes in the face of a clear declining trend for output of consumer and intermediate goods. For capital goods the trend is not clear except that this month’s sharp gain arrests, for at least one month, what had seemed to be the onset of a declining trend there. Instead, all we can say is that capital goods output has become very volatile. This has come at a time that weather effects and the calendar placement of Easter have been beneficial to the euro-economy. So if these sorts of ephemeral factors are responsible for the monthly rebound we could see the onset of true trend and weaker growth in the months ahead.

Euro Area MFG IP
SAAR except m/m Mo/Mo Apr
08
Mar
08
Apr
08
Mar
08
Apr
08
Mar
08
 
Euro Area Detail Apr
08
Mar
08
Feb
08
3Mo 3Mo 6mo 6mo 12mo 12mo Q-2-
Date
MFG 0.3% -0.6% 0.1% -0.7% 3.0% 1.6% 2.2% 2.9% 1.4% -0.3%
Consumer 0.4% -0.6% -0.4% -2.1% -0.4% -0.3% -0.8% 0.6% -1.1% -0.5%
C-Durables 1.7% -1.6% -0.1% -0.1% 1.2% -0.3% -3.4% 1.1% -3.2%  
C-Nondurables 0.2% -0.5% -0.4% -2.4% -0.6% -0.1% -0.4% 0.6% -0.6%  
Intermediate 0.3% -0.5% 0.3% 0.1% 2.1% 1.2% 1.9% 2.5% 0.6% 0.1%
Capital 2.0% -1.6% 0.5% 3.4% 5.9% 6.0% 4.0% 7.5% 3.6% 6.5%
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