Global| Jan 12 2011Euro-Area IP Surges in November
Summary
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 [...]
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% |
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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