Recent Updates
- Iceland: HICP (Apr)
- Sweden: Valueguard-KTH HOX House Prices (Apr), Capacity Utilization (Q3), Turnover Index (Mar)
- Philippines: International Reserves (Apr)
- Japan: Japan: Machinery Orders (Mar), Housing Credit, Loans for
- more updates...
Economy in Brief
U.S. Mortgage Applications Continued to Slide Amid Higher Rates
The biggest declines have been in refinancing activity, while applications for purchase are just starting to crack...
UK Inflation Jumps
Inflation is at the highest rate since the series began in January of 1989...
U.S. Industrial Production Much Stronger than Expected in April
The increase in manufacturing output in April was once again led by motor vehicle and parts production...
U.S. Retail Sales Posted Solid Rise in April
Notwithstanding falling real incomes and declining confidence measures, consumer spending posted a solid increase...
U.S. Home Builder Index Took a Steep Drop in May
This is the fifth straight month that builder sentiment has declined...
Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
Profits and Margins Plunge In Q1: Expect More Margin Contraction As Fed Squeezes Inflation
The Many Links of Inflation Cycle: Hard Landing Is Needed to Crack Them
Peak Inflation & Fed Policy: A Relationship Which Should Worry The Fed And Scare Investors
Why Have the Yields on TIPS Been Negative in the Past Two Years?
by Robert Brusca January 30, 2012
The EU commission indices provide some perspective on Europe’s unraveling and embattled economy. For now the relentless
erosion has abated but pressure remains and adverse dynamics are still in force.
The overall EU index rose this month for only the second time in 12 months. Its level leaves it weak in its queue of ordered vales as its ranking percentile stands in the eighteenth percentile (bottom one-fifth) of its historic queue. The EMU index is similarly weak in the 21st percentile of tis queue. Both are aided substantially by German’s presence, as Germany is the largest EMU member whose country weight adds the most to EMU and EU metrics- and Germany stand strong compared to the rest of the Zone
Germany is by far the best euro-performer The German country reading stands in the 76th percentile of its range, a top one-quarter reading. Other large EMU nations like France and Italy stand in the 21st percentile and 9th percentile, respectively, of their ordered queues. On balance there is Germany and then there is the rest of EMU.
In January the readings for France and Italy slipped; Italy has been sliding hard in the last few months when the rest of the Zone has been stabilizing. Greece also turned lower after several months of increases in its index. Greece’s fate one again hangs in the balance.
Among the five major index readings, four of them improved this month. The largest improvement came from the services sector whose move from -6 to -3 is the 15th largest improvement on record for the sector. The industrial sector, construction sector and consumer confidence reading each improved by a single point. Deteriorating on the month was retailing which fell from -11 to -14, an outsized drop for that sector. Retailing and consumer confidence are the two sectors with the lowest queue standings in the Zone at percentile metrics below their respective 15th percentiles.
All countries remain short of their pre downturn cycle peaks. Germany’s overall reading shows it is at 64% of is cycle peak while Spain is clinging to 48% of its cycle peak. France is only at 19% and Italy at nearly 13%. Zone members continue to languish at levels well below their respective peaks. But the downward momentum in the Zone has abated for now.
The Greek situation is under discussion at the current EU meetings. Germany this weekend tried a heavy-handed approach to force Greece to give up some if its budget sovereignty. Greece refused to have its arm twisted and was angered by the request. In Davos they took straw vote among the denizens of Davos; that enlightened group continues to look for the Euro’s survival, at least for now.
But with Germans treading over the line of national sovereignty to try and get the discipline it seeks to lend Greece more funds we can see that the euro’s days are numbered. Countries cannot survive in a unit like EMU without trust. The Greeks have violated that trust and we can see that the Germans, at least, have not decided to let bygones be bygones. This is a vexing problem that will continue to haunt Greece and Germany and the Zone. The Greeks aren’t the only ones with budget issues.
Zone dynamics are in a new phase Sarkozy and Merkel, once antagonists, are finding Merkel ‘backing’ Sarkozy’s re-election bid even though he is well behind in his polls.
Euro politics are still in a tizzy. Ireland may push for a vote on any modification of the treaty and some important modifications are being sought to close the fiscal loopholes. Ireland already has made the biggest contribution to euro stability of any EMU member by rolling and undertaking its banking system’s debts. Its memory is long, too.
EU Sectors and Country level Overall Sentiment | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
EU | Jan 12 |
Dec 11 |
Nov 11 |
Oct 11 |
%ile | Rank | Max | Min | Range | Mean | By Q rank% |
Overall Index | 92.8 | 91.6 | 92.6 | 93.6 | 52.4 | 207 | 117 | 67 | 50 | 100 | 18.2% |
Industrial | -7 | -8 | -8 | -7 | 69.6 | 125 | 7 | -39 | 46 | -7 | 50.6% |
Consumer Confid | -21 | -22 | -21 | -21 | 32.4 | 221 | 2 | -32 | 34 | -12 | 12.6% |
Retail | -14 | -11 | -13 | -12 | 37.1 | 219 | 8 | -27 | 35 | -7 | 13.4% |
Construction | -31 | -32 | -29 | -29 | 30.0 | 189 | 4 | -46 | 50 | -19 | 25.3% |
Services | -3 | -6 | -5 | -3 | 43.9 | 137 | 34 | -32 | 66 | 9 | 25.5% |
% M/M | Jan-12 | Based on Level | Level | ||||||||
EMU | 0.6% | -0.7% | -1.0% | 93.4 | 49.8 | 199 | 118 | 69 | 49 | 100 | 21.3% |
Germany | 2.2% | 1.0% | -0.2% | 106.6 | 76.4 | 60 | 117 | 73 | 45 | 99 | 76.3% |
France | -2.2% | 0.2% | -3.6% | 91.4 | 39.3 | 199 | 117 | 75 | 43 | 100 | 21.3% |
Italy | -1.3% | -5.8% | 1.2% | 84.3 | 24.7 | 230 | 121 | 72 | 48 | 100 | 9.1% |
Spain | 2.0% | -1.4% | 0.2% | 92.2 | 46.1 | 202 | 116 | 72 | 43 | 100 | 20.2% |
Greece | -1.1% | 2.3% | 1.4% | 74.9 | 6.9 | 247 | 119 | 72 | 48 | 100 | 2.4% |
Portugal | 1.5% | 0.9% | -7.9% | 75.7 | 10.0 | 248 | 117 | 71 | 46 | 100 | 2.0% |
Memo:UK | 5.6% | -0.7% | -0.7% | 93.6 | 56.6 | 206 | 116 | 64 | 52 | 100 | 18.6% |
All since June 1990 | 253 - Count | Services: | 184 -Count | ||||||||
Sentiment is an index, sector readings are net balance diffusion measures |