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Economy in Brief

Industrial Orders Keep Rising In France And In Italy Pessimism Continues To Haunt The Outlook, However
by Robert Brusca September 21, 2009

French orders were up by a solid 2% in July as foreign orders surged by 14%. In Italy orders jumped by 3.2% on foreign order strength of 15.6%. Both Italy and France as seeing strong orders in the new quarter (Q3, one month in) led by huge gains in orders from abroad.

Both Italy and France show recovery patterns of order growth but order levels that remain just a bit less than 25% below year-ago levels.

Europe- Europe continues to show economic recovery. But with the G-20 set to meet in the re-made but old US industrial city of Pittsburgh, the OECD, the IMF and a German think-tank have taken this opportunity to highlight the risks to the future of this recovery. The OECD is very concerned about the health of banks and that there could be some backsliding and troubles with capitalization. The IMF is concerned that German employment could rise sharply over the next year, pushing unemployment to over 10.5% and creating weak growth under 0.5% in 2010. This would clearly become a problem for growth in the rest of the e-Zone. Not to be outdone by this sort of sour outlook, the German think-tank IWH Institute warns of a credit crunch highlighting the potential for a double dip as government stimulus programs come off the books.

Pessimism shuns trends: Despite some very strong current indicators that spread across the major EMU economies there remains in Europe, much like in the US, a core of pessimism about the risks. Unlike after other recessions apparently this recovery cannot be trusted to bottom and begin to rise and for that upswing to be self-sustaining. The abnormal degree of and scope of early government help that will eventually be rescinded is one of the common culprits in both US and European pessimism. If that is so what ever do it in the first place?

Professional pessimists: While we expect the main international regulators and oversight agencies to be less than cheerleaders and to be wary of risks, the extent to which private sector naysayers have piggy-backed on that tact is surprising. For now we are left with the reality of an upswing and one that is looking quite nice and consistent across EMU nations. Meanwhile, the outlook sours as we speak. While the future may still hold risks, one must wonder if they are as great as is being said or if lowering expectations has been taken to a new extreme by politicians who in the end are chastened by their own role in this crisis by seeing it develop and watching powerlessly, aware that it is a disaster that occurred on their watch.

Italy Orders
Saar exept m/m Jul-09 Jun-09 May-09 3-mo6-mo12-mo
Total 3.2% 2.6% 0.8% 29.5% -1.9% -24.2%
  Foreign 15.6% 2.6% 0.9% 105.4% 17.6% -19.1%
  Domestic -2.9% 2.5% 0.7% 0.9% -11.3% -26.9%
Sales 0.7% -1.6% -1.0% -7.4% -11.0% -22.1%
French Orders
Saar exept m/m Jul-09 Jun-09 May-09 3-mo6-mo12-mo
Total 2.0% 1.2% 0.0% 13.7% 5.6% -22.6%
Foreign 14.0% -3.0% 7.0% 96.1% 19.1% -16.7%
IP xConstruct 0.6% 0.2% 3.0% 16.3% 2.8% -13.8%
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