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Economy in Brief

Europe Begins to Cut Its Losses
by Robert BruscaMay 4, 2009

Europe’s PMI readings bounced sharply in April across EMU nations. France made the second largest monthly rise at 3.59 points just above the UK’s 3.35 point gain. From its cycle low, the UK has made the greatest gain rising by 8 points with Spain and Austrian next on gains of 6.1 and 5.9 points respectively from their cycle lows. Italy has rebounded the least with a rise from its low reading of just 2.6 points. Looking at the levels of the indices in their respective range of value they have occupied Italy is also the weakest followed by Germany even though Italy’s raw MFG reading is higher than Germany’s.

These statistics show us that Europe is stirring from its lows across countries. The UK and France are making the largest initial moves, while Germany, the EMU’s largest economy, is one of the worst laggards.

Just today the EU Commission has cut its outlook for growth in EU this year, on Monday it revised lower its forecast for growth in the European Union this year citing consumers reacting to the weakening labor market and the slump in world trade as well as the effects of an ongoing housing market correction. The commission, the executive arm of the EU, presented its spring quarterly economic forecasts that projected that gross domestic product in both the European Union and the euro area would contract by 4 percent in 2009 and by 0.1 percent in 2010.

So amid signs that the EMU economy may have begun to decelerate at a slower rate paving the way for an eventual upturn the EU commission has unleashed a more pessimistic outlook.

NTC/Markit MFG Indices
  Apr-09 Mar-09 Feb-09 3-Mo 6-Mo 12-Mo Percentile
Euro-13 36.83 33.93 33.55 34.77 34.70 40.75 13.6%
Germany 35.40 32.36 32.14 33.30 33.36 41.43 12.5%
France 40.10 36.51 34.81 37.14 36.92 41.55 21.1%
Italy 37.21 34.59 34.99 35.60 35.56 40.40 11.4%
Spain 34.61 32.92 31.85 33.13 31.47 35.64 21.3%
Austria 38.97 33.68 34.58 35.74 35.60 41.40 22.7%
Greece 40.88 38.17 38.88 39.31 40.19 45.98 15.8%
Ireland 36.10 35.12 33.20 34.81 36.39 39.99 13.1%
Netherlands 38.76 35.92 35.47 36.72 37.26 43.12 13.5%
EU
UK 42.85 39.50 34.93 39.09 37.34 40.69 37.2%
percentile is over range since March 2000
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