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Economy in Brief

Euro-Area IP Advances But Loses Momentum
by Robert Brusca  February 10, 2011

The larger Euro-Area economies and the UK show mixed results for December. While growth rates swooned over six months three-month growth rates for IP are back to where they were for yr/yr growth for the large economies - except for Germany. Still, Germany shows the strongest growth over three-months among the four large economies we compare with it; yet Germany also has the biggest slowdown at three-months from its pace over twelve months.

German output spiked in October then posted two straight months of declines in November and December. Still, its October gains were enough to give it the highest growth rate among this sample of countries over three months. But the irregularity behind that gain does raise some questions about the outlook and would raise more questions if German industrial orders weren’t still so strong.

Turning to the more detailed data for France and for Italy made available today, we find substantial differences in the composition of IP growth. France posts strong IP growth over three-months for capital goods as well as over the year. In Italy capital goods growth is negative over three-months but is still strong over 12-months. Consumer goods output is accelerating in Italy. In France it is mixed accelerating for durables and decelerating for nondurables. Intermediate goods output is strong and accelerating in Italy but is losing momentum in France.

Main Euro-Area Countries and UK IP in MFG
  Mo/Mo 3Mo 6Mo 12Mo Dec-10
MFG Only Dec-10 Nov-10 Oct-10 Dec-10 Dec-10 Dec-10 Q:2-Date
Germany: -0.1% -0.5% 2.7% 8.5% 7.0% 13.1% 10.3%
France:IPxConstruct'n 0.3% 2.3% -0.9% 7.1% 5.5% 7.0% 3.4%
Italy 0.2% 1.1% -0.1% 5.1% 2.3% 5.7% 0.0%
Spain -1.3% 1.6% 0.6% 3.5% -4.9% 0.1% -4.4%
UK -0.1% 0.7% 0.4% 4.0% 3.8% 4.4% 4.5%
Mo/Mo are simple percent changes others are at SAARS

Both France and Italy report an increasing growth rate for autos and transportation equipment but in France the acceleration and the growth rates are much stronger.

On balance the expansion is continuing in the EU/EMU area. The softening in three-month growth rates for industrial output does not appear to be anything worrisome. A step down from an elevated pace as the recovery matures is to be expected. There does not seem to be anything more sinister going on in this case than a normal cyclical slowing.


French IP Excluding construction
SAAR Except M/M Dec-10 Nov-10 Oct-10 3Mo 6Mo 12Mo Q:2-date
IP total 0.3% 2.3% -0.9% 7.1% 5.5% 7.0% 3.4%
Consumer Dur 1.7% -1.9% 3.4% 13.1% 9.1% 6.5% -4.9%
Consumer Ndur -0.6% 0.2% 0.2% -0.8% -1.1% 3.8% 7.0%
Capital 1.0% 1.4% 0.0% 10.1% 11.2% 10.6% 7.0%
Intermed -1.3% 2.2% -0.1% 3.3% 3.6% 4.6% 3.6%
Memo
Auto 1.3% 11.7% 3.5% 88.2% 49.9% 13.6% 34.6%
Italy IP Excluding construction
SAAR Except M/M Dec-10 Nov-10 Oct-10 3Mo 6Mo 12Mo Q:2-date
IP-MFG 0.2% 1.1% -0.1% 5.1% 2.3% 5.7% 0.0%
Consumer 1.4% 0.8% -1.0% 4.7% 0.0% -0.1% -4.1%
Capital -1.7% 1.8% -0.7% -2.6% 2.5% 8.6% -3.4%
Intermed 1.0% 1.2% 0.6% 12.0% 7.4% 8.4% 6.5%
Memo
Transportation -2.8% 4.7% 0.2% 8.3% 4.5% 4.5% -3.3%
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