Recent Updates

  • Philippines: GDP Summary (Q4)
  • Japan: Wage Indexes, Monthly Labor Survey (Nov)
  • New Zealand: Accomodation Survey (Nov)
  • Canada: Wholesale Trade (Nov)
  • US: National Financial Conditions Index (Dec)
  • Ireland: WPI (Dec)
  • Spain: Cement Statistics (Jun), Industry Turnover Indexes, New Orders, Services Sector Activity Index (Nov), Government
  • more updates...

Economy in Brief

EMU Orders Continue to Rise and Cut Year/Year Drop
by Robert Brusca October 23, 2009

The EMU economy continues to spin off better economic signals. Orders rose by 2% in August after a 3% rise in July and a 4.2% gain in June. As a result the sequential growth rates are showing explosive growth in orders- up at a 43% annual rate over three months - still orders are lower Yr/Yr by over 20%. EMU MFG sales were up in August, too, and they show sequential growth rates are improving.

Orders rose in two of the four largest economies as Italy and the UK took order setbacks in August. Italy and the UK also show dropping orders over three months.

The UK took a set back in growth as GDP dropped 0.4% Q/Q in Q3 (a 1.6% annualized rate of decline) an unexpected result that extends the UK recession that was thought to have ended. Italy ’s sharper drop in orders of 8.6% raises some questions there. The UK GDP drop has brought pressure on sterling as one might well have expected, but the weakness in Italy is another matter as it is safely cocooned within the euro area. We do not know how badly Italy ’s orders drop will affect the economy but retail sales have faltered recently. Consumers and businesses are seeing and expecting totally different trends there. The hardest thing for EMU policymakers is to have countries within the Zone moving in different directions.

Euro Area and UK Industrial Orders & Sales Trends
Saar except m/m % m/m Aug
09
Aug
09
Aug
09
Aug
08
Aug
07
Qtr
2
Date
Euro Area Aug
09
Jul
09
Jun
09
3 Mo 6 mo 12 mo 12 mo 12 mo Saar
Manufacturing Sales 1.0% 1.6% -0.9% 7.1% 2.3% -19.6% 3.5% 5.8% 11.2%
  Intermediate -3.7% 4.8% 6.8% 34.6% 3.2% -21.4% 2.0% 9.0% #N/A
Manufacturing Orders 2.0% 3.0% 4.2% 43.7% 20.4% -21.8% -2.1% 4.7% 37.5%
Countries: Aug
09
Jul
09
Jun
09
3Mo 6mo 12mo 12mo 12-mo Qtr
2
Date
Germany: 1.8% 2.0% 4.1% 36.9% 33.2% -24.7% -1.0% 6.0% 30.5%
France: 3.0% 4.1% 1.5% 39.8% 6.1% -13.8% -7.7% 8.1% 43.8%
Italy -8.6% 2.1% 1.6% -19.0% -18.8% -29.8% -3.4% -1.6% -34.5%
UK(EU) -15.6% 7.3% 3.6% -22.5% 1.3% -11.1% -12.6% 4.3% -48.8%


Markit PMIS are up-beat - The goods news for EMU was that the Markit monthly look-ahead PMI reading for October improved overall and for each of MFG and Services. The MFG reading actually showed expansion for the first time since May of 2008. Overall the EMU area seems to be continuing its progress despite Italy ’s troubles.

Adding to the sense of good news in the face of the UK ’s ominous GDP drop was an improvement in Germany ’s IFO index as business climate improved along with current conditions and expectations.

A background report from the OECD demonstrated that world trade flows had stabilized in 2009-Q2. To be sure it remains a day of mixed data but putting the UK ’s GDP report aside the news elsewhere was pretty upbeat. Dropping UK GDP is a big fly in the ointment, but on the whole the signals from the UK economy have not turned uniformly glum. Until GDP was reported, based on data in hand, economists had expected a rise in GDP. Sometimes GDP accounting can have this effect. While GDP is the best comprehensive measure of how an economy is doing, around economic turning points oddities with trade and inventories can send mixed the signals more than they should. While we need to be wary of the UK economy’s performance, on the whole the global economy seems to be in an upswing and doing better. Ultimately that will help the UK too.

close
large image