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Economy in Brief

Euro-Area IP Surges in November
by Robert Brusca   January 12, 2011

Tale of two... Euro-Area IP is a tale of two trends. One trends applies to capital goods output which seems strong and firmly ensconced in a still accelerating uptrend. There is euro-optimism for you. The other trend is lower and is headed lower: there is euro-pessimism for you! Intermediate goods is the sector that by definition feeds the two final goods sectors and here we see the down trend in the consumer sector takes precedence over the strength in capital goods as intermediate goods output is heading on a lower trajectory. You take the high road and I’ll take the low road and I'll go the way of Ireland before ye...

Eenie Meenie chile beanie the spirits are about to speak - As we wonder about the future of Euro-Area growth, it is disturbing to see the consumer goods consumption path and the path of output which services it, heading lower and not being better-supported by the ongoing European expansion. It is hard to believe that the capital goods sector will carry the economy forward without some up-tick in consumption and without an increase in the output of consumer goods. That is our cross roads, the capital/consumer goods cross-trends.

Daze of Wreckening - Meanwhile in financial markets Portugal has paid through the nose to get its financing. Spain and Italy are waiting in the wings for their day of reckoning (or daze of 'wreckening?') tomorrow. At the same time there is all sorts of background chatter that would have the EMU bailout facility do more and take on a larger role with an enlarged capacity.

Dream on.

Kumbay...YA? Or NO? - It may happen. But Europe has still not come together over its debt problems. Most recently it has been helped out by China which surely has better uses for the monies in such large underdeveloped economy and in Japan where trouble has been just around the corner for over a decade. China is trying to buy influenced and Japan is trying to keep pace, to save face, and to rent respectability. It's a tough road.

Challenges... is Euroland the land of the euro of the land or Europe? - Meanwhile Europe's problems are not getting better since it is the economic numbers than underlay the economy's ability to service debt. While Germany has posted a stellar estimate for growth in 2010 most of that came in an early surge. Its current path is suspect. And its willingness to share more with the rest of the Zone is surely in doubt. Germany has far less of an appetite to hunker down and bear a burden for a united Europe than it did for a united Germany. But it will need to help the rest of Europe if it wasn't to preserve the nice Competitiveness cushion it has built up behind the protective wall of the euro exchange rate. Meanwhile, other euro-economies have challenges beyond those posed by merely the market acceptance of their debt.

Europe is an ongoing admixture of challenge and conundrum that will likely remain that way for all of 2011.

Euro-Area MFG IP
SAAR Except M/M Mo/Mo Nov
10
Oct
10
Nov
10
Oct
10
Nov
10
Oct
10
 
Euro-Area Detail Nov
10
Oct
10
Sep
10
3Mo 3Mo 6Mo 6Mo 12Mo 12Mo Q-4
MFG 1.0% 0.9% -1.0% 3.6% 4.5% 3.8% 3.4% 7.7% 7.9% 2.8%
Consumer 0.0% 0.4% -0.8% -1.6% -1.8% -0.5% 1.4% 2.6% 3.6% -2.1%
C-Durables 0.1% 0.0% -2.2% -8.3% -3.4% -4.0% 1.1% -0.1% 2.1%
C-Non-durables 0.0% 0.4% -0.5% -0.3% -1.0% 0.4% 1.6% 2.9% 3.7%
Intermediate 1.6% 0.3% -0.9% 4.2% 4.4% 4.6% 2.8% 7.7% 8.0% 3.9%
Capital 1.4% 1.7% -0.9% 9.0% 17.1% 13.0% 13.4% 11.9% 12.2% 12.3%
Main Euro-Area Countries and UK IP in MFG
  Mo/Mo Nov
10
Oct
10
Nov
10
Oct
10
Nov
10
Oct
10
 
MFG Only Nov
10
Oct
10
Sep
10
3Mo 3Mo 6Mo 6Mo 12Mo 12Mo Q:2
Date
Germany: -0.6% 3.0% -0.8% 6.1% 16.9% 7.4% 15.9% 12.5% 13.8% 9.4%
France:
IPxConstruct'n
2.3% -0.8% 0.0% 6.2% -2.6% 1.7% 1.3% 6.0% 4.5% 2.3%
Italy 1.1% 0.0% -2.1% -3.9% -0.9% 2.7% 2.5% 4.7% 3.9% -1.8%
Spain 1.3% 0.4% -6.3% -17.5% 0.0% -5.3% -4.5% 0.4% -1.1% -10.4%
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