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Economy in Brief

Euro Area Industrial Output Steps Back In June
by Robert Brusca August 12, 2009

Euro Area industrial output rose in May but is back to its declining ways in June. The negative rates of growth are still diminishing to a decline of 4.8% over three months from -15.1% over six months and from -18% over twelve months. Trend progress continues despite the months set-back. And, with this monthly drop, the region steps back behind the line that says it has turned the corner to growth. It has not.

Nondurable output is actually increasing taking some of the downward pressure of consumer goods output where durable goods trends are still horrifically negative.

Country level trends have flattened out or show progress to positive output In Germany, France, Spain and in the UK. Germany, France and Spain show positive three-month output growth rates for MFG. But over six- and twelve-months all the large countries are still showing output declines.

Underling the erratic and slow nature of progress in EMU, Germany’s July IFO report show some progress is still being made, but at a snail’s pace. The IFO’s current conditions and expectations readings edged higher, boosting the German index for business climate in July. But the IFO’s overall and sector readings on diffusion tell us that this progress while small is still not very widespread as diffusion indices remain negative and made their own small progress in the month. The biggest sector improvement in the current diffusion index presentation was in retailing. Manufacturing made the biggest improvement in the expectations section. But services made the turn from a negative reading to a positive one in the expectations survey- a significant development even if on a small two-point move.

Some of the luster from retailing’s gain in the current sector survey is lost as the expectations for retailing made a similar but opposite large move losing ground and blunting the current message of improvement in the sector. .

Conditions in Germany and in EMU remain in flux. Trends are in the right direction but some are still slow-moving. We still see episodic signs of backtracking. It’s too soon to say it is recovery or to be sure that we are going there, despite the strong readings from the OECD leading indicators. Questions remain.

E-zone MFG IP
Saar except m/m Mo/Mo Jun
09
May
09
Jun
09
May
09
Jun
09
May
09
 
Euro Area Detail Jun
09
May
09
Apr
09
3Mo 3Mo 6mo 6mo 12mo 12mo Q-2
MFG -0.5% 0.2% -1.0% -4.8% -6.9% -15.1% -20.0% -18.0% -18.3% -9.5%
Consumer -0.3% 0.3% -0.1% -0.3% -0.5% -4.9% -5.5% -5.8% -5.1% -3.2%
  Consumer Durables -4.2% -1.8% -0.7% -23.7% -11.5% -23.8% -21.5% -24.4% -19.9%  
  Consumer Nondurables 0.2% 0.6% 0.0% 3.7% 1.9% -1.7% -2.9% -2.8% -2.6%  
Intermediate Goods -0.5% 0.5% -1.5% -6.2% -10.3% -13.9% -23.6% -22.4% -22.9% -12.2%
Capital Goods -0.3% 1.0% -2.9% -8.6% -6.9% -22.8% -26.5% -21.9% -22.7% -12.5%
Main E-zone Countries and UK IP in MFG
  Mo/Mo Jun
09
May
09
Jun
09
May
09
Jun
09
May
09
 
MFG Only Jun
09
May
09
Apr
09
3Mo 3Mo 6mo 6mo 12mo 12mo Q:2
Date
Germany 0.2% 5.0% -3.1% 8.2% 10.6% -16.3% -24.5% -19.8% -19.5% -1.9%
France: IP excl Construction 0.3% 2.8% -1.4% 7.2% -1.8% -10.0% -13.3% -12.8% -13.2% -3.2%
Italy -1.2% -0.2% 0.6% -3.4% -15.9% -21.4% -26.3% -23.9% -22.7% -17.8%
Spain 3.9% -6.9% 5.9% 10.1% -22.2% -17.7% -21.6% -14.4% -22.4% -2.3%
UK: EU member 0.5% -0.6% 0.0% -0.5% -1.8% -6.4% -11.2% -11.7% -12.8% -0.7%
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