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Economy in Brief

EMU Trade Surplus Is On An A Slight Up-Trend Signs Of Real Recovery Remain Elusive
by Robert Brusca August 17, 2009

Exports have the better trend among bad results
EMU exports and imports are still on life support in terms of their year-over-year drops. But exports are showing slightly more life in recent months. Apart from splitting hairs, exports and imports were roughly flat in June.

The end of the end but where is the new beginning?
Although there has been some pick up in orders for industrial goods, exports themselves are not popping in Europe. Europe is getting ready to exit recession based on the fact that the EMU’s GDP barely fell in 2009-Q2 as Germany and France posted positive GDP growth numbers. Today, Japan posted an increase in its Q2 GDP so the list of countries exiting recession is growing. Yet, some of those exiting recession do not seem to have very good breadth or strength to the various key economic sectors that need to drive and sustain a true recovery.

Technical recovery
The economies exiting recession are doing so rather narrowly on barely positive GDP without much breadth or momentum to their turnaround raising questions about the strength of recovery as well as about its sustainability. The OECD leading indicators see a lot of momentum shift in Europe, but not so much lift in Japan. Both Europe and Japan depend a lot on trade for growth. The U is the sole country in this group of four that has not yet posted positive GDP. But the US is, in contrast, showing a lot of upward momentum as well as decreased downward momentum; it has trimmed its deep negative growth rates across most sectors and business cycle measures. US GDP only fell at a -1% annual rate in 2009-Q2. It too, Like EMU, is on the brink of recovery.

Searching for Mr. Good -Growth
For Europe the end of recession is not being created by much if any increase in consumer spending. Business fixed investment is still chilled. And as we see here exports have the smallest of possible upward gradients in train. While recessions have been deemed as technically over in a number of countries I think we are still on the outlook for a real recovery anywhere.

E- Area  16-Trade trends for goods
  M/M% % Saar
  Jun-09 May-09 3M 6M 12M 12M Ago
Balance* €€ 1,042 €€ 1,108 €€ (2,399) €€ (1,142) €€ (481) €€ 698
All Exp -0.1% -1.8% -10.3% -24.8% -22.8% 3.9%
Food and Drinks 0.0% -2.0% -7.6% -16.6% -9.9% 10.9%
Raw materials 0.4% 2.2% 16.0% 8.8% -21.2% 7.7%
Other -0.1% -1.9% -11.0% -26.0% -23.7% 3.4%
  MFG -3.0% -2.3% -25.4% -30.7% -25.2% 1.0%
All IMP 0.0% -2.5% -19.8% -26.9% -25.9% 9.8%
Food and Drinks -2.8% -2.6% -34.5% -15.3% -8.8% 8.0%
Raw materials -0.8% -4.1% -35.8% -59.5% -42.4% 4.8%
Other 0.2% -2.5% -17.7% -25.7% -26.0% 10.1%
  MFG -2.5% -1.7% -29.8% -29.1% -23.2% -0.2%
*Eur mlns; mo or period average
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