Economy in Brief

The European Commission reading for overall sentiment in July slipped again to 94.5 from 95.3 in June, continuing a 3-month rundown in the overall assessment of sentiment for the Monetary Union.

July saw slippage in the industrial measure that fell to -9 from -7 in June, continuing a string of ongoing declines in that sector. Construction also fell to -3 from -2 in June, continuing a series of slides for that sector. The services sector was unchanged at a reading of +6 that it had fallen to in June from a value of +7 in May - this continues a series of low or slipping readings for the services sector. Month-to-month retailing improved slightly, rising to a -5 reading from -6 in June, bringing it back to its May level of -5. Consumer confidence also improved to -15.1 from -16.1 in June; there is a series of small improvements there as well in eight of the last nine months.

On balance, sentiment is slipping; however, there are several key sectors that are showing some signs of stability, recovery, or less slippage overall.

Slippage across countries Looking at the big four economies, there was slippage in Germany and France in July while Italy and Spain showed improvements. In June, there were declines in the big four economies, except for France and the same is true in May, when there were declines in the big four economies excepting France. But declines are posted by the large economies and in all cases where declines are present, they represent drops of 1% or more. In July, both Italy and Spain improve; Spain's improvement is a substantial improvement of 1.3% as Italy ticked higher by only 0.1%. Weakness dominates the large economies, but it has some notable exceptions.

Looking across the whole of the Monetary Union, 18 of 19 members report. In July, 7 members show declines in sentiment; this compares to 13 members showing declines in June, and 14 members showing declines in May. But as we demonstrate above, the largest economies are still showing declines. Germany, the largest EMU economy, logs month-to-month to decline on all three-months. France shows a month-to-month decline only in July, while Italy and Spain show declines in June and May but then rebound in July.

Sector standings The percentile standings by sector show two sectors, retailing and construction, with performance above their historic medians on data since about 1990. However, the overall index has a standing near its lower quartile at a 27.7 percentile standing; the industrial sector has a lower 30th percentile standing, consumer confidence has lower 20th percentile standing while the services sector has a 43-percentile standing.

Standings by country The standing data by countries show that among the eighteen countries, only four have readings that are above their historic medians. Those four are Cyprus with a 62.7 percentile standing, Malta at a 79th percentile standing, Greece with an 89-percentile standing, and Italy with the 57-percentile standing. For the remaining countries, the standings are much lower with the highest country percentile standings being Spain at a 44-percentile standing and Portugal at about a 40-percentile standing. Only Luxembourg (3.3%) and Estonia (5.7%) log single-digit standings. There are a number of countries that have standings between the 10th and 20th percentiles including Austria, Belgium, Finland, the Netherlands, Slovenia, and Slovakia… as well as Germany. Nine countries stand in the lower one-fifth of their historic queue of data compared to only one in the top one fifth of its historic queue.