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Economy in Brief

Industrial Output Is Making Continued Gains In Europe
by Robert Brusca January 13, 2010

Europe’s recovery remains on track in November as industrial production has risen in all the large EMU states. The UK, an EU member, only saw a very minor set back to MFG IP with output dropping by 0.1% in November. Of the largest EMU states, the rise in the Italy was disappointing at just 0.2%. The UK’s small drop actually out did expectations.

Year-over-year the IP drops have been trimmed to the range of -4% to -10% for this group of countries. Despite the set back to UK IP in November at -5.4% it demonstrates one of the smaller Yr/Yr drops in IP and exhibits a strong improvement from its result in October (-7.8%, Yr/Yr). All large countries show an improvement in their Yr/Yr drop in November compared to October and for most the difference is large.

The chart above shows how strong the recoveries have been. Despite all that strength over the last 3- and 6-months, 2009 has been a very bad year for Europe.

German GDP is just reported to have posted an outsized drop of 5% in 2009 as its exports and investment goods sectors were hard hit. As it was, government programs produced a boost that kept the steep GDP decline from being even larger. Public consumption rose by 2.7% from 2008 while private consumption edged ahead by just 0.2%.

The recovery in IP is however a good development. Germany’s industrial sector depends on exports which fell by 14.7% in 2009. Exports have begun to get traction again and IP is on the rise as a result. 2010 promises to be a much better year, but then 2009 put all of Europe in a very deep hole and the real question is not 'Will 2010 be better?' but, 'How much better will 2010 be?' That is not yet resolved and is a point of some contention. So far, good strong growth is in train and seems to have staying power. Perhaps more optimism is warranted.

Main Euro-Area Countries and UK IP in MFG
  Mo/Mo Nov
09
Oct
09
Nov
09
Oct
09
Nov
09
Oct
09
 
MFG Only Nov
09
Oct
09
Sep
09
3Mo 3Mo 6mo 6mo 12mo 12mo Q:4
Date
Germany: 0.8% -1.8% 3.6% 10.6% 16.6% 9.1% 18.6% -9.1% -13.7% 8.0%
France:
IPxConstruct'n
1.1% -0.6% -1.2% -2.6% 4.2% 6.1% 8.6% -3.8% -8.0% 0.5%
Italy 0.2% 1.0% -5.2% -15.3% 6.4% 7.0% 5.9% -10.2% -13.2% -2.6%
Spain 1.2% -3.0% 0.5% -5.5% -20.2% 17.9% -0.2% -3.9% -13.0% -14.2%
UK: EU member -0.1% 0.0% 1.6% 6.1% -1.8% 0.9% -0.4% -5.4% -7.8% 1.6%
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