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Economy in Brief

IP Dropping Fast in Key EMU Countries
by Robert Brusca November 10, 2008

EMU IP is sinking fast. Add Italy and France to the list of large EMU countries with industrial output dropping like a stone. The Q3 growth rates for IP in France and in Italy each are negative, Italy’s drop is at a huge -8.4% pace while France’s drop is a still weak at -2.7%. In Italy consumer goods, capital goods and intermediate goods output each is falling. Transportation is twice as weak in Italy as it is in France for the quarter. In France intermediate goods output is even a bit weaker than it is in Italy in Q3 but the drop in output of capital goods is quite a bit less severe and consumer goods output in France continued to rise strongly in Q3. French consumer goods output, in fact, has risen in each month of the third quarter as well.

On balance, as the accompanying chart shows, IP is falling rapidly in Germany, Italy and France. The drop in France shows some signs of leveling off in its pace of decline over the past few months while Italy and Germany are still plunging at what seem to be accelerating rates of decline. Italy ’s pattern of decline is a bit more complicated than that for Germany and France. But Germany has the most severe weakness. While it has so far the smallest Yr/Yr drop, its output has decelerated more sharply since German output was growing so much more strongly until early 2008 when the pace of increase suddenly and sharply moved lower and into a state of decline.

French IP Excluding Construction
Saar except m/m Sep-08 Aug-08 Jul-08 3-mo 6-mo 12-mo Quarter-to-date
IP total -0.5% -0.4% 1.3% 1.6% -4.2% -1.9% -2.7%
Consumer 0.4% 0.1% 1.5% 8.2% 2.8% -0.4% 6.2%
Capital 0.7% 0.0% 0.3% 4.2% 0.5% 1.7% -3.8%
Intermediate -1.5% -0.8% 1.3% -4.1% -7.2% -4.4% -5.0%
Auto -3.1% -1.2% 4.2% -1.3% -14.8% -8.3% -9.3%
Italy IP Excluding Construction
Saar except m/m Sep-08 Aug-08 Jul-08 3-mo 6-mo 12-mo Quarter-to-date
IP-MFG -2.3% 0.4% -1.3% -12.1% -8.0% -5.7% -8.4%
Consumer -3.3% 0.8% -2.3% -18.0% -6.5% -5.4% -10.4%
Capital -2.5% -0.9% -0.5% -14.9% -11.1% -8.2% -13.7%
Intermediate -2.6% 1.1% -0.3% -7.2% -5.9% -5.4% -3.5%
Transportation -5.7% 1.9% -3.9% -27.2% -21.1% -13.1% -22.4%
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