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Economy in Brief

EU Commission Indices Surprise: Show a Real Turn Is in Progress 
by Robert Brusca August 28, 2009

The EU Commission indices kicked out the jams this month with increases that left the economic forecasts standing in the dust wondering what happened. The overall commission sentiment index made its largest jump since at least 1988l lead by the industrial index’s largest jump since 1988 and the service sector’s largest jump since it began in 1996. While consumer confidence and retailing improved month-to-month their respective rises were milder ranking as the 31st best rise (out of 251 that is still not bad). The EMU overall index made its second largest jump, The German sentiment index made its largest jump along with the UK. The monthly rises for Italy and Spain ranked about 20th in their respective histories. France did not report.

In terms of levels all sectors have a ways to go as sector readings are negative in absolute terms.

In terms of the various indices standing in their respective ranges compared to historic vales the EU index stands in the 36th percentile of its range just above the boundary for the lower third of its range. The EMU index Germany and Spain all stand around the 30th percentiles of their respective ranges. The UK is better off in the 40th percentile of its range.

In terms of sectors, the relatively strongest sector is retailing in the 41st percentile of its range followed by the consumer confidence reading (35th percentile) and services (31st percentile). The industrial sector stands in the 28th percentile of its range and construction hovers in the bottom 13th percentile of its range.

For the most part these distinctions are not so important. All the various indices stand well below the 50 percentile mark that denotes the middle of their respective ranges. All are well below par. All are well away from their respective range midpoints. If this were a game of football none would have an insurmountable lead but the construction sector (team) might consider resting its best players to use another day…The good news this month is in how much the various indices have risen and improved not about what strikingly high values they have reached. These readings are still quite weak across sectors and across EU and EMU reporting countries. The momentum, however, is excellent.

EU Sectors and Country level Overall Sentiment
EU Aug
09
Jul
09
Jun
09
May
09
%tile Rank Max Min Range Mean By
Queue
Rank%
R-SQ
w/Overall
Rank of
Change
Overall Index 80.9 75 71.1 67.9 36.9 229 116 60 56 100 -48.7% 1.00 1
Industrial -26 -30 -33 -34 28.3 236 7 -39 46 -7 -53.2% 0.90 1
Consumer Confidence -20 -21 -23 -26 35.3 220 2 -32 34 -11 -42.9% 0.86 31
Retail -12 -14 -17 -17 41.9 216 6 -25 31 -6 -40.3% 0.66 31
Construction -36 -37 -37 -39 13.0 227 4 -42 46 -16 -47.4% 0.47 44
Services -11 -19 -23 -26 31.7 145 32 -31 63 14 5.8% 0.89 1
    % m/m   Aug
09
Based on  Level Level      
EMU 6.1% 3.8% 4.3% 80.6 30.5 230 117 65 53 100 -49.4% 0.95 2
Germany 6.3% 4.1% 4.3% 85.9 28.0 218 121 72 49 100 -41.6% 0.70 1
France #N/A 0.5% 4.4% #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A
Italy 4.5% 4.4% 1.4% 87.5 37.0 222 122 67 55 100 -44.2% 0.83 20
Spain 3.7% 5.2% 2.0% 81.9 30.5 223 117 67 50 100 -44.8% 0.74 19
Memo: UK 13.1% 7.3% 4.1% 83.5 40.3 226 124 56 68 100 -46.8% 0.59 1
Since Oct 1988 251 -Count Services: 154 -Count      
Sentiment is an index, sector readings are net balance diffusion measures
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