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Economy in Brief

EU Commission Index Encounters Growth Set-Back
by Robert Brusca   January 27, 2011

The EU Commission overall index fell in January to 105.8 from 106.1. Among the main gauges only the industrial gauge improved in January. Consumer confidence slipped, retail confidence stumbled badly and the other sectors were unchanged. Among our group of sample countries EMU Members Germany and Portugal each took a step back as did the EU’s UK.

The queue-based rankings tell the story of which sectors are leading. The industrial sector for EMU is in the 96th percentile of its range since 1990. The service sector lags the most standing in the 29th percentile of its range. Next weakest is construction, in its 30th percentile followed by consumer confidence in its 28th percentile. Oddly with consumer confidence and services so weak retailing stands in the 96th percentile of its range on the heels of the reading for MFG.

Notice that these ranks do not seem to correspond to the net balance readings in the table. The rankings do not compare the raw readings directly but rather look at each sector's raw reading according to its own historic performance. So retailing with a +4 reading is in its own historic context just about as rare and strong a reading as having MFG at +5. Whereas the services sector at a stronger-seeming +6 stands only in the 29th percentile of its range –much weaker than MFG or retailing.

The country data show clear divisions for this group: Germany is the strongest in the 93rd percentile of its queue-based range. France is second in its 77th percentile of its. For the rest the readings drop off sharply as Italy stands below its average at the 44th percentile, the UK is in its 43rd percentile, Spain and Portugal both are in the 18th percentile of their respective queue-based ranges. Greece is in the bottom 7th percentile of its queue. Yet each is a member of the Euro-Area and there is one monetary policy for all of them. With that, the ECB already is saber-rattling over inflation risks.

This month's performance shows a weaker overall Europe. We are seeing the same thing in US data where data are irregular but where relatively firm industrial readings are still being posted. Weaker results are being seen in other sectors in the US as is true in Europe. The UK has put up a weaker than expected Q4 GDP report. The US issues its Q4 GDP reading on Friday. Europe has all sorts of question marks hanging over its head. This report dispels none of them.

EU Sectors and Country level Overall Sentiment
EU Jan
11
Dec
10
Nov
10
Oct
10
%ile Rank Max Min Range Mean
Overall Index 105.8 106.1 105 103.8 80.3 77 115 68 47 100
Industrial 5 4 1 0 95.7 9 7 -39 46 -8
Consumer Confid -13 -12 -11 -12 55.9 155 2 -32 34 -11
Retail 4 8 3 3 87.9 10 8 -25 33 -6
Construction -28 -28 -28 -28 31.1 175 3 -42 45 -18
Services 6 6 8 5 58.7 121 32 -31 63 12
  % M/M Jan
11
Based on Level Level
EMU -0.1% 1.2% 1.3% 106.5 78.6 73 116 71 46 100
Germany -1.4% 1.3% 2.4% 115.6 88.6 17 121 75 46 100
France 0.7% 3.1% -0.9% 108.0 76.1 58 119 74 44 100
Italy 0.2% 0.8% 1.4% 99.1 57.4 141 120 71 50 100
Spain 0.2% -0.9% 0.3% 91.3 43.9 206 116 72 44 100
Greece 3.1% -1.3% -0.5% 75.6 24.4 233 123 60 62 99
Portugal -0.8% 3.3% -2.4% 91.2 47.5 206 116 69 48 100
Memo:UK -1.2% 0.8% 0.4% 100.5 70.5 142 115 65 50 100
All since Oct 1990 253 -Count Services: 172-Count
Sentiment is an index, sector readings are net balance diffusion measures


EU Sectors and Country level Overall Sentiment
EU By Queue Rank% Average Level is:
Overall Index 69.6% 100.1
Industrial 96.4% -8.0
Consumer Confid 38.7% -11.4
Retail 96.0% -5.7
Construction 30.8% -18.4
Services 29.7% 12.5
  % Average
 EMU 71.1% 106.4
 Germany 93.3% 115.1
  France 77.1% 107.9
  Italy 44.3% 99.2
  Spain 18.6% 91.7
Greece 7.9% 76.7
Portugal 18.6% 91.6
Memo:UK 43.9% 100.5
All since Oct 1990 253 '-Count Services: 172
Sentiment is an index, sector readings are net balance diffusion measures
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