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EN FRANCAIS

ECONOMIC CONFIDENCE INDICATORS : JANUARY- FEBRUARY 2007

In nearly all accounts and acording to Eurostat figures, as regards industrial production , East European member states outperformed both the Euro area and the EU 27. Lithuania often took the lead, along with Bulgaria, while Nordic countries recorded strong rates as well. France often underperformed but showed confidence for the next coming months.

Overall, industrial confidence reigned with the exception of France, overburdened with stagnant unemployment and the upcoming Presidential elections. Nevertheless, and thanks to a hectic construction sector, optimism showed for the next coming months. Consumer confidence hit rock bottom in the EU 27 and especially among East European countries where high unemployment rates remain a major concern as well.

The Euro area’s INDUSTRIAL OUTPUT INDEX fell -0.2% in January against the previous month based on estimates, and decreased -0.3% in the EU 27. Germany’s production index outperformed and increased +1.7% while France’s stayed within the EU 27 average. On the same period, output grew substantially and overwhelmingly in low costs member states, Lithuania +5.9% Poland +2.7% and Slovakia +2.9% (provisional) while noticeably decreasing in Euro area countries such as Finland -3.5% and the Netherlands -4.3% (estimate) along with other member states. In one year to January, France’s production index lagged behind while the EU 27 output index rose +3.7% (estimate) Germany’s rose an impressive +7.1%

Low cost member states reaped the fruit of a hectic January month, Slovakia +17.4% (provisional) Poland +15.6% but so did other member states Ireland +9% (estimates) and Spain +5.1%

In the Euro area, the INTERMEDIATE GOODS output index stood at 111 in January compared with Germany’s 121.7 while France underperformed at 98. East European member states remained best performers with indicators representing more than twice the EU 27 average : Lithuania 242.3 Poland 167.2 Latvia 151 and Estonia 210.3 Expressed in monthly variances, the Euro area’s intermediate goods output fell -0.4% (estimate) in January : France’s declined -1.1% following +1.3% in December while Germany’s stayed on a high momentum +1.3% in January (+1.2% in December). Lithuania

In one year to January, the Euro area’s intermediate goods output index increased +5.7% and +5.9% in the EU 27. Germany’s skyrocketed +11.4% and France’s grew a modest +0.5%

East European member states substantially outperformed western countries : Lithuania’s index +20% increase ranked slightly behind Poland’s +21.9% output jump. Bulgaria’s intermediate goods production rose +20.3% (estimate) Similarly, CAPITAL GOODS output indices in East European member states remained nearly twice as high as the Euro area ’s 116.7 (estimate ) 118.1 or the EU 27 (estimate) : Slovakia 279.7 (estimate), Bulgaria 232.8 (estimate) Estonia 240.1 and Poland 205.4 Nordic countries saw output stay on high momentum as well, outperforming both the Euro area and the EU 27, while as with Intermediate Goods, France’s production index stood at a modest 108.3 compared with Germany’s 126.6

In variances in January compared with the previous month, the Euro area’s capital goods output index rose +0.8% and the EU 27 +0.5% as Greece, Italy, Latvia and Romania recorded the strongest gaps. Germany’s index rose +4.5% and France +0.3% Out of East European champions, Slovakia’s jumped +16.2 (estimate) Poland +3.5% Bulgaria’s +2.1% (estimate) while Finland’s -7.6% and Sweden -0.2% reflected a pause from a previous hectic period. In one year to January and expressed in variances, the CAPITAL GOODS output index rose +7.5% in each the Euro area and the EU 25 (estimates) France’s grew +1% and Germany’s an impressive +10.3% Slovakia’s magnificent +64.2% increase (estimate) was closely followed by Lithuania’s +35.3% Poland’s +19.7% and Estonia’s +15.8% Sweden’s production index rose +11.2% (+19.2% in December)

IN FEBRUARY, the ECONOMIC CONFIDENCE INDICATOR mirrored most countries industrial performances : the Euro area’s 109.7 lagged behind the EU 27 112 as Latvia, Lithuania, Poland, Sweden and Finland rated between 118 and 121. France’s indicator stayed upbeat at 108.7 (against 107.9 the previous month), and Germany’s 108.5 fell back from 109.7 the previous month.

In direct correlation, CAPACITY UTILIZATION, which includes price trends, stayed high in Q1/07, at 84.4 in the Euro area and 84.1 in the EU 27 France’s 86.1 slightly behind Germany’s 87.6 rated among the highest indicators, between 84 and 89, which included Finland, Sweden, the Czech Republic and Hungary. Slovakia, Latvia, and Poland recorded lower rates due to high unemployment despite strong output performances. Romania’s noticeable improved indicator, 80.3 in February compared with 77.5, reflected the country’s acquired EU membership from this January similarly to Bulgaria, which recorded a slower improvement however, 76.8 from 74.9 INDUSTRIAL CONFIDENCE INDICES, which include production expectations, assessment of order books, assessment of stocks and finished products, rated high 5.4 in the Euro area and 5.2 in the EU 27 France’s 1.1 involved concerns expressed as regards the Euro’s impact, many restructuring plans in addition to the upcoming Presidential elections whereas Germany’s confidence indicator, void of such concerns, stood at a high 7.7 Out of the EU 27, Malta recorded a rock bottom indicator -20.1 while Lithuania’s low 2.3 contrasted with its industrial performance. Bulgaria’s 10.9 from 11.9 the previous month translated a slight step back from enthusiasm gained in January when the country gained EU membership. Estonia’s 25.9 recorded the highest industrial confidence indicator

CONSTRUCTION CONFIDENCE INDICATORS, which include order books assessment and employment expectations, mirrored both France’s hectic sector (due to a chronic housing shortage), the indicator stood at 15.9 similarly to Estonia’s 41.1 thanks to a vibrant environment. The Euroa area’s indicator -0.1 thus fell, whether EU 27 stood at 0.8 Germany’s slow real estate sector impacted that indicator down which stood at -21.6 In Hungary, the lack of manpower sent the index to dive -23.2 while Slovenia, which became a member of the Euro area from this January saw its indicator grow to 19.9 from 12.7

CONSUMER CONFIDENCE INDICATORS, which include the financial situation over the next 12 months, general economic situation over the next 12 , employment expectations and savings over the next 12, fell to negative figures in February in the Euro area -4.8 and in the EU 27 -4.6 as a total 13 countries expressed concerns over that indicator definition criteria. France’s indicator at -8.3 reflected little optimism over unemployment, stagnant salaries and inflation nevertheless improved from the previous month -10.3 Germany’s indicator stood at a positive 2.3 East European member states confidence indicators fell to record low : Hungary -51.3 Bulgaria -23.9 Slovania -7.4 Latvia -29.5 while in western Europe Greece’s -30.3 and Portugal -32.1 nevertheless slightly improved from January even lower ratings. Nordic countries stayed upbeat with Sweden’s consumer confidence indicator at 19.7 was followed by Finland’s 16.4 and Denmark’s 8.2 The Netherlands’ indicator stood at 16.6

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