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Economy in Brief

E-Zone Orders Drop Sharply...Again
by Robert Brusca January 22, 2009

E-Zone orders are dropping sharply in November. Based on some more topical country level reports, it is not surprising that the EMU orders series made another sharp fall – and more those lie ahead. Today, in fact, the UK CBI survey of industry posted another sharply weaker result with its up minus down diffusion index falling to -48 in January compared to -35 in December. That’s right, in January. Diffusion data are generally out a month or more ahead of the actual underlying series that they describe and, as such, they provide a road map of where we are headed. Still, the variables themselves tell the actual story of industry.

In November the EMU series is telling us of increased pain in the zone. The carnage is widespread. For Germany, France, Italy and the UK Yr/Yr orders are dropping in November by 20% or more from November of one year ago. In the quarter to date (Q4) the country level growth rates for orders are more like a negative 50% at an annual rate compared to Q3 2008.

The weakness is spread more or less equally across domestic and foreign orders in the EMU series. Foreign orders are down by more over 12-months but the drop in November is worse for domestic orders.

For the moment we are in the worst of the grip of the downturn. As we admit this, the international banking crisis is not getting any better. The ‘Dutch boys’ with their fingers in the dikes are calling out for more recruits --for more stop-gap plans. Others are crying out for a more permanent solution and for mindful attention to what all this interventionism will mean for the future. The US has just completed its transition to new leadership. Japan is eroding faster after showing some resilience. The strength in the yen is finally creating more distress there. The data from the industrial sector in EMU are telling. The pressure on the financial sector is bad and it is going to get worse. We were already in a financial mess before this recession began. Now the recession is global in nature and it is going to spawn and spread the usual credit mess that comes hand in hand with recession- and this recession is severe. So be prepared, because things will get worse... That is the main message from the day’s weak industrial data in Europe.

E-zone-13 and UK Industrial Orders And Sales
Saar except m/m Mo/Mo Nov-08 Oct-08 Nov-08 Oct-08 Nov-08 Oct-08
Ezone Detail Nov-08 Oct-08 Sep-08 3-Mo 3-Mo 6-mo 6-mo 12-mo 12-mo
MFG Orders -4.5% -5.7% -5.4% -47.3% -40.3% -27.6% -28.3% -21.0% -15.2%
MFG Sales -0.9% -1.9% -1.9% -17.0% -17.0% -10.5% -8.6% -2.6% -1.7%
  Consumer 0.1% 0.0% -0.2% -0.3% -1.4% -0.7% -1.2% -0.5% -0.6%
  Capital -0.3% -0.6% -0.6% -5.8% -6.7% -5.3% -5.2% -1.5% -1.2%
  Intermediate -7.0% -5.5% -6.0% -53.6% -38.7% -28.6% -26.9% -20.5% -12.2%
Memo:MFG                  
Total Orders -4.5% -5.7% -5.4% -47.3% -40.3% -27.6% -28.3% -21.0% -15.2%
E-13 Domestic MFG orders -7.0% -5.5% -6.0% -53.6% -38.7% -28.6% -26.9% -20.5% -12.2%
E-13 Foreign MFG orders -3.5% -6.9% -5.9% -48.9% -46.5% -30.3% -32.3% -24.8% -18.9%
Countries: Nov-08 Oct-08 Sep-08 3-Mo 3-Mo 6-mo 6-mo 12-mo 12-mo
  Germany (MFG): -7.2% -7.1% -8.0% -60.3% -39.7% -37.5% -29.6% -24.4% -16.6%
  France(Ind): -5.7% -11.8% 0.6% -50.8% -55.2% -33.7% -38.5% -25.5% -18.8%
  Italy (Ind): -6.3% -6.6% -3.8% -49.7% -39.0% -27.2% -23.2% -21.1% -12.1%
  UK (Engineering Ind): -8.4% -24.0% 28.8% -35.6% -35.3% -38.9% -35.2% -21.7% -8.9%
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