Of fiscal tightening while business is on going
Contradictory statements in the middle of lazy summer days brought additional jitters to already nervous markets : prudent central banker-speak announced that recovery is in the making … but not quite as yet. Such news was based on reports derived from indicators published in May while a few days later were published …indicators for June : the mighty growth cycles. According to the OECD’s August release, the Euro area’s composite leading indicators (a combination of monthly industrial output and business cycles) point to expansion in the coming six months. Germany’s remains « relatively robust », but France’s and Italy’s point to « below trend growth». Since then, additional monthly indicators were published and point to a pinch of salt : these two respective export order books indices rebounded in July and new orders in the manufacturing industry simply jumped up to September. In between, August will simply reflect the auto industry well known time for recess and its nearly empty assembly lines. On top of it all came news about central governments upcoming penance: spending cuts so as to clear the tables with embarrassing tabs. So where to look at next ? Out of BRIC countries, the OCDE’s forecasts solely see the sun rise in Brazil while India and China are projected to under perform. Russia is likely to be set for future slowdowns. Taking into account that investments swings are now engaging an upward trend, that temporary jobs are picking up at last, that demand for gold has remained strong and is projected to remain sustained for electronics worldwide, how about keeping an eye on the estimated number of months’ production ? Definitely on the rise throughout the Union
The adoption of the EU Directive on self-employed workers and assisting spouses effective since the first days of this month, provides self-employed workers and their partners with better social protection, including the right to maternity leave of at least 14 weeks. Endorsed in June by EU 27 Member states, the new rule grants female self-employed workers and assisting spouses or life partners of self-employed workers, a maternity allowance and a leave should they choose to take it. The provision also grants assisting spouses and life partners (recognized as such in national law) the right to social security coverage (such as pensions) on an equal basis as formal self-employed workers, if the Member State offers such protection to self-employed workers. EU Member States now have to introduce the Directive into their national laws within two years. The new Directive repeals the 1986 law.
CONSUMER PRICES stayed nearly stable or +0.1% in July in Metropole month-on-month (-0.3% including the French Overseas Department) and moved down to 0.8% in one year (+1.7% including the French Overseas Departments) according to Insee latest figures. July reflected the manufactured products -1.6% price cut due to the summer sales seasons with clothing and footwear -8.9% accounting for the hardest price fall. Food products prices declined -0.5% due to fresh produce -4.4% price drop. Energy prices stayed unchanged as oil products prices deceased by 1%. The services price index recorded the usual +0.3% price gain as transport and communication prices rose a steep +1.5%. In one year, food prices +1.4% increase pushed up the index as fresh produce prices soared +13.5% Energy prices jumped +10.5% with oil products prices up +13.6% The index major price cuts were recorded by health products -1.8% and transport and communication -0.8%
In the Euro area, annual inflation moved up to 1.7%, the highest increase since December 2008, according to Eurostat figures. Equally to France, transport recorded the highest monthly rate +0.5% while clothing observed the lowest rate or -9.7% However, package holidays +0.15% had the largest upwards impact on the overall index followed by accommodation services +0.11%. Inversely, garments and footwear had the lowest downward impacts, respectively -0.51% and
-0.12%
COMPANY FORMATIONS, excluding the self employed, dropped -23.1% in the period up to July to 18 627 new companies month-on-month, according to Insee figures, while including the self-employed and in gross figures, formations fell -14.8% to 42 866 new businesses. All sectors recorded major formation declines, led by the Real Estate group -24.3%. The industrial sector saw new companies fall -18.6% with the manufacturing industry accounting for -21.7% lesser new businesses. Among major company formation declines, the Construction sector stayed in the red with the number of new businesses falling -18.3% followed by IT and Communication
-11.3%, Services to Individuals
-11.8%, B2B Consultancy -9.1% and Health-Education-Social Services
-4.3%. In one year but expressed in gross figures, company formations including the self-employed status increased +37.2%. Best performers included the industrial sector +55.4%, with the manufacturing industry recording +34.8% new businesses. The services to individuals sector saw formations rise +58.9%, B2B consultancy +45.4% and construction +41%
ORDER BOOKS surged +3.1% in the period up to June and the Euro area’s +2.5% (+2.4% in the EU 27) according to Eurostat latest figures. Export order books +1.7% increase in France outperformed new industrial orders from the Euro area, a +0.5% gain according to Insee figures. Capital Goods recorded +6.2% new order increase boosted by electronic equipment +8.6% IT and electric-optical products +4.2% and machinery and equipment +1.7%. By contrast, new orders of Intermediate Goods products fell -1.8% pushed down by lesser orders of textile-clothing and metallic products. Durable Consumer Goods dipped -2% while the Non Durable Consumer Goods sector observed sustained demand with new orders up +2.4% as orders of pharmaceutical products rebounded +5.9%. The Automobile industry new order index moved up to +1.7%. In the Euro area, new orders of Intermediate Goods dropped to 0.1% while Capital Goods rose +5.3% Durable Consumer Goods and Non Durable each saw new orders decline by nearly half, respectively -1.1% and -1.8% In one year, France’s new orders rose +13.3% and in the Euro area +22.6% (+22.5% in the EU 27). New orders jumped +32.8% in Germany, +19.4% in the UK, and +13.4% in Spain. The region’s main industrial groups recorded each their highest cumulative increases year-on-year in the last six months: Intermediate Goods edged down to +29.6% (from +30.6%) , Capital Goods rose +22.7%, and Durable Consumer Goods +14.2%. Non Durable Consumer Goods saw new orders move down to +2.5%, a pause due to the previous month +9.1% surge
UNEMPLOYMENT fell -0.5% in July month-on-month in Metropole to 2 676 6 million jobless, the second consecutive although modest decline according to Pôle Emploi figures, while the total number of unemployed including all categories of people seeking work and the French Overseas Department rose to 4 208.3 million or +0.2% on the same period. Temporary employment accounted for this slight improvement as registrations at job centers due to the end of short term contracts (under six months) fell -1.2% and due to the end of temporary jobs -2.9%. The labor market showed signs of a tangible although modest upward trend with long term vacancies (over six months) down -0.3% while temporary vacancies grew +6% and occasional job vacancies (under one month) +9.4%. Per gender, male unemployment decreased by 0.5%, and female by 0.6%. Per age group, the under 25 jobless rate declined -2.8% to 448 000 unemployed while the 25-49 saw unemployment fall -0.3% to 1 740 1 million. For the over 50, unemployment increased +0.8% to 488 500 men and women seeking work. The number of jobless registered at job centers for over a year and all categories included, increased +0.8% as those registered between two years and under three years rose +2%. In one year, unemployment in Metropole moved down to +5.4% (from +6.9%) and including all categories of people seeking work including the French overseas Department to +8.2% (from +9.4%)
Capacity utilization in the manufacturing industry increased +3.1% in the third quarter to 78.8 points according to the European Commission quarterly survey while the Euro area’s rose +2.5% to 77.5 points. Of the region’s major economies including France, Germany’s index rose +2.9%, Italy’s +1%, and Spain’s +2.5%. In the UK, the Union’s other major heavy weight, the index rose +1.8%. The survey also showed that France’s production capacity in the manufacturing industry moved up three points and the estimated number of months’ production assured by orders on hand in the manufacturing industry increased to 3.7 months from the previous 3 months, the first quarterly increase since Q3/09. In the Euro area, the index rose to 3.2 months (from 3 months). In Poland, eastern Europe largest economy, the index recorded a historical high 17.4 months
New orders in the manufacturing industry gained four points to 17 in the third quarter according to the European Commission quarterly survey while the Euro area’s remained stable at 18 points. Of France‘s major trade partners Germany‘s index moved down to 31 (from the previous quarter 41), but remained stable in Spain at 5. Italy’s rose to 5 (from -3) and the UK’s jumped four points to 18. In Poland, eastern Europe largest economy, the index increased five points to 15. Export volume expectations rose two points in the Euro area, turned positive to nil (from -7) in France,