EU Indexes Partially Rebound – Stabilize- in May

The EU Commission indexes for May rebounded to 96 from 95.6 in April after standing at 96.3 in March. On a month-to-month basis, there's very little change across the major components of the EU indexes. The industrial index is unchanged at -10, the retailing index is unchanged at -7, the construction index is unchanged at -6, consumer confidence improves to -14.3 from -14.7, and the services index moves up to +7 in May from +6 in April. The gains in those two sector readings are responsible for the gains and the EMU sentiment index on the month. But three of the five component readings are unchanged month-to-month in May.

Across 18-early reporting countries, only four showed a deterioration in readings in May, compared to seven that deteriorated in April, and five that eroded in March. Fewer countries have been posting declines in their country sentiment indexes in recent months.

Rankings, however, continue to reveal a great deal of weakness, as the overall monetary union metric has only a 34.3 percentile standing which puts its rank just above the lowest 1/3 of its historic results. Among the eighteen countries listed in the table, only three have rankings above their historic medians. Those are Lithuania, Cyprus, and Greece, all are relatively small European Monetary Union member countries. Among the four largest countries, German performance ranks in its 24.7 percentile, France has a 41.3 percentile standing, Spain has a 42.8 percentile standing, while Italy has a 48.6 percentile standing. None of that is impressive.

The five components of the European Monetary Union index show above-median standings for retailing and for construction, with the industrial gauge at a 26.4 percentile standing, the consumer confidence at a 27.5 percentile standing, and services at a 40-percentile standing. The European Monetary Union in May has a 34.3 percentile standing.

Looking at sector rankings by country, there isn't much strength here either, with only Italy having three of five sectors with standings above their 50th percentile, those being retailing at an 85.4 percentile standing, services at an 80.9 percentile standing, and construction at a 91.9 percentile standing. Construction has the only above-median standing in all four large economies. Retailing is above its median standing in all countries except France. Still, the unweighted EMU Big-Four country standings are higher than the weighted EMU-wide standings for all components. When the Big-4 average is GDP-weighted, the readings shift lower (except for confidence). Industry and services both are significantly stronger in the Big-4 than for the EMU as a whole- although part of that is not giving Germany a large weight among the Big-4. When we use GDP weights for the Big-4, their weighted averages for retail and services are substantially lower.

On balance, the message from these EU Commission indexes is that conditions have stabilized across countries and across components in recent months. And the percentile standings tell us that they are stabilizing at historically weak levels.