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Economy in Brief

Germany Shows Extreme Weakness Like the Rest of Europe
by Robert Brusca September 24, 2008

The IFO sector readings are plunging and the overall indices are weak as well. In September the business expectations index remains in the lower 13 percentile of its range. The current situation is mid range at the 51st percentile. But sector readings are deteriorating with manufacturing, wholesaling and retailing falling especially sharply in just the past few months.

Moreover, all of euro is beginning to show this same sort of malaise. Yesterday the Bank of Belgium index fell from 5.9 in August to14.4 in September. Italian business confidence released today registered its lowest reading in seven years. French business confidence, another morning release, fell to its lowest mark in over five years.

The German IFO reading is only the lowest in three years. But this year’s low in expectations sub index is the lowest since 1993. With the recent surge in oil prices and mini jump in the euro Europe has a lot on its plate to worry about. If Europe escapes recession it will be nothing short of a miracle.

Summary of IFO Sector Diffusion readings: CLIMATE
CLIMATE Sum Current Last Mo Since Jan 1991*
  Sep-08 Aug-08 Average Median Max Min Range % range
All Sectors -14.8 -11.1 -6.6 -9.8 16.8 -26.3 43.1 26.7%
MFG -11.6 -6.8 3.5 3.8 27.2 -22.6 49.8 22.1%
Construction -25.2 -26.4 -32.8 -38.8 -7.9 -50.5 42.6 59.4%
Wholesale -10.3 -5.5 -9.9 -14.5 23.5 -39.4 62.9 46.3%
Retail -24.0 -21.5 -20.3 -20.5 1.2 -39.6 40.8 38.2%
Services 8.3 7.7 10.7 9.5 28.5 -15.7 44.2 54.3%
* May 2001 for Services          
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