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Economy in Brief

Consumer Confidence Continues To Lag But EU Indices Advance
by Robert Brusca   September 29, 2010

The EMU overall sentiment index rose in September to 103.4 from 103.1 keeping the European advance in play. Of the main five countries four saw increases in their confidence levels, Italy was the exception, but Spain's index rose strongly for the second month running.

Ranking the various sectors' performance by their queue standing, the most rigorous comparison, finds the overall index in the 57th percentile of its ranked queue. Retailing leads as it ranks in the 92nd percentile of its queue followed by a 71% standing of the industrial sector, in its queue. Consumer confidence ranks 43rd followed by the services and construction sectors each of which stand below the 30th percentile of their respective ranges. These latter readings are still very low readings after a year of recovery.

Note that the standings in the queue give different measures of strength (relative strength) than the raw EC Commission net diffusion readings. This is because some sectors like services nearly always are expanding so a positive number is not as impressive while in construction, where up and down cycles are common, does not find positive readings so easy to come by.

The chart shows that the EU indices continue to chronicle improvement in overall sentiment across most nations. But the improvement is coming at a successively lower rate of improvement.

As for the individual counties Germany is doing best as its overall sentiment reading is in the 92nd percentile of its range of queued observations. After Germany France is the only large country above the 50th percentile in its ordered queue. EU member UK is the low 40th percentile while Italy is in the 30th percentiles and Spain is below 20.

The EMU countries rank just a bit stronger overall than does the broader EU group, but much of this high ranking seems to owe to Germany and its larger weight in the smaller group.

On balance is clear where the progress is. It is surprising that the retailing sector is doing so well with the consumer confidence still lagging. And, like in the US, the services sector- a big part of the economy- is lagging-and that sector is the key jobs sector. Europe takes another small step forward- not backward – in September and that is good but it remains very slow progress and not at a speed or with momentum that encourages us to believe that the improvement will endure.

EU Sectors and Country level Overall Sentiment
EU sep
10
aug
10
jul
10
jun
10
%ile rank max min rng mean by
Q
rank%
avg
level
Overall
Index
103.4 103.1 102.1 100.3 75.2 107 115 68 47 100 57.7% 100.2
Ind. -2 -2 -4 -6 80.4 73 7 -39 46 -8 71.1% -8.0
Cons-
-umer
Confid
-12 -11 -14 -15 58.8 142 2 -32 34 -11 43.9% -11.3
Retail 2 1 0 -4 87.1 18 6 -25 31 -6 92.9% -5.7
Const. -29 -31 -31 -32 28.3 188 4 -42 46 -18 25.7% -17.9
Serv-
-ices
5 5 6 4 57.1 125 32 -31 63 13 25.6% 12.6
%m/m Sep
10
based
on level
level
EMU 0.9% 1.2% 2.2% 103.2 71.3 104 116 71 46 100 58.9% 100.2
Germany 1.8% 1.0% 3.8% 113.2 83.3 19 121 75 46 100 92.5% 100.4
France 0.1% 2.9% 1.9% 102.7 64.1 121 119 74 44 100 52.2% 100.2
Italy -1.2% -0.9% 1.7% 96.8 52.7 171 120 71 50 100 32.4% 100.1
Spain 1.2% 1.0% -2.4% 90.7 42.5 208 116 72 44 100 17.8% 99.8
Memo:
UK
-2.1% 1.5% 1.4% 100.2 69.9 148 115 65 50 100 41.5% 100.0
All since Oct 1994 253 -Count Services: 168 -Count
Sentiment is an index, sector readings are net balance diffusion measures
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