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Economy in Brief

Despite Headlines About New Record Drops, Europe Is Healing
by Robert Brusca June 25, 2009

Orders in the Area fell by 32.1% a new Yr/Yr record leading to headlines about how slow the European recovery is going to be. But the pace of decline in orders over three months has been sharply reduced to an annual rate of decline of 8.2% compared to 30-plus percent drop over six months and 12-months. Both foreign-sourced and domestic–sourced orders have trimmed their respective rates of decline sharply over three months. The strongly negative Yr/Yr growth rate is mostly due to legacy weakness over the earlier period.

Country level statistics are encouraging. Germany and France have cut their respective three month growth rate declines to a pace that is single digits; the annualized rate of decline is less than a 5% pace. Italy is still shedding orders at nearly a 30% pace. In the UK a spike in orders has boosted the three month growth rate to a +53% annual rate.

Other signs in the Area show improvement as well. Italy, despite pronounced order weakness, has been showing improved confidence for both businesses and households. It posted a surprise rise in IP as well. The EMU-wide PMI indices for MFG and for Services are showing improvement on the month. On balance their trends are nothing to be disappointed about, taking into account the extent of the weakness in the Area which has hit countries somewhat unevenly and where fiscal responses have been far from uniform as well. For example The Netherlands today confirmed that its GDP drop in Q1 was the worst in sixty years. It takes time to come back from that kind of weakness

E-Area-13 and UK Industrial Orders
Saar except m/m Mo/Mo Apr-09 Mar-09 Apr-09 Mar-09 Apr-09 Mar-09
E-Area Detail Apr-09 Mar-09 Feb-09 3-Mo 3-Mo 6-mo 6-mo 12-mo 12-mo
  MFG Orders -1.0% -0.2% -0.9% -8.2% -14.0% -34.4% -42.0% -32.1% -31.0%
E-13 Domestic MFG orders -0.5% -1.4% 1.7% -0.9% -11.9% -34.4% -39.7% -32.5% -20.8%
E-13 Foreign MFG orders -2.1% -0.6% 1.5% -5.1% -25.8% -43.5% -49.2% -39.5% -32.3%
Countries: Apr-09 Mar-09 Feb-09 3-Mo 3-Mo 6-mo 6-mo 12-mo 12-mo
  Germany (MFG): -1.1% 3.7% -3.3% -3.4% -27.7% -39.8% -47.0% -35.6% -34.3%
  France (Ind): 0.9% -7.4% 6.7% -1.4% -13.9% -18.9% -34.9% -30.4% -24.7%
  Italy (Ind): -3.7% -2.7% -2.2% -29.4% -30.0% -36.9% -40.1% -31.8% -29.9% 
  UK (Engineering Industy): -8.3% 7.1% 13.3% 53.0% -56.3% -28.2% -45.2% -27.0% -11.4%
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