EU Commission Indices Continue Their Strong Run in EMU

The EU Commission Index for all of EMU gained more than a full point to stand at 113.0 in September up from 111.9 in August. The reading marks a 92.0 percentile standing for the index a reading that has been thigh historically only about 8 percent of the time.

Among the sector indices, three (industry, consumer confidence and retail) have rankings in their respective 90th queue percentiles, one (Construction) has a ranking in its mid-80th queue percentile and another (services) has a ranking at its 70th queue percentile. On the month all the sector readings are higher except for services which is unchanged month-to-month

On a country by country basis the results are impressive in September. Of the 16 early-reporting EU members only two, the small economies of Luxembourg and Malta showed slippage month-to-month. Moreover most countries that showed large slippages in August have more than made up for that in September. Over two months only Germany, Austria, Belgium, Cyprus and Estonia are net lower. The UK, still and EU member for now, has seen declines in each of the past two months but its overall index still has a standing in its 79th percentile.

Over the past few months in writing up this report I have made the point that while there are some exceptionally strong country-level queue standings the results stratified by unemployment rates show much more tempered enthusiasm. That is true again this month, of course. But now the EU Commission rankings are even more impressive. For these 16 early reporting EMU members, all except two have queue standings in their respective top 20 percentiles. Those two exceptions are Belgium (with a 67 percentile standing) and Greece (whose low standing has been creeping up and now stands at its lower 40th percentile). Greece has made three solid-to-strong month-to-month gains in a row.

German Unemployment is much lower than the level for EMU has a whole.

The PMI gauges and levels make the region look exceptionally strong. But the unemployment situation is skewed much more to moderation with a core of still high unemployment members. On the All-important inflation front, inflation continues to lag behind the EMU target. But Germany just reported inflation for September at a four month high, at a pace of 1.8%. Of course, Germany has been one of the fastest growing economics is EMU and it has the lowest rate of unemployment and would be expected to be showing one of the higher inflation rates. The ECB , of course, targets EMU-Area wide inflation which is still lagging its targets more substantially.