APRIL 2008
Confidence Indicator declines amid general slow down
FRANCE’s Economic Sentiment indicator dipped 2.5 points to 103.1 pushed down by a declining Industry indicator sliding to -1 from 1, similarly to Services to 8 from 10, along with Retail trade to nil from 2 and Construction to 13 from 17. In the Euro area, the ESI did not fare better falling to 97.1 from 99.6, dragged down by the Industry indicator falling to -2 from nil, Services to 7 from 9, Retail trade collapsing to -5 from 1 and Construction to -12 from –9. Out of the same region, Germany’s Retail trade indicator dived to -18 from -16 Construction fell further to -29 from -25. Out of the EU 27, Denmark’s Retail trade indicator recorded a substantial drop to 6 from 13. Most East European member states recorded general ESI declines with the exception of Romania due to its Retail trade indicator climbing to 24 from 22.
Out of the Industry indicator, production expectations in the Euro area fell but France’s grew to 18 from 16. The UK recorded one of the hardest fall out of the EU 27, to -5 from 1 and similarly Malta to 8 from 18. Order books entered the red zone in the Euro area, declining to -5 from an already negative -1 and France’s followed to -4 from -1. Germany’s declined to 1 from 5 along with Austria to -16 from -11, Sweden’s picked up to -4 from an abysmal -11, inversely to the UK to -7 from 4 while Finland’s fell to 2 from 12. As a direct result of this general slow down, France’s stocks of finished products grew to 17 from 11 while the Euro area’s rose to 9 (from 7). Germany’s stocks stayed stable at 6 while Hungary’s climbed to 2 from -1, Malta’s to 5 from -1, Austria to 5 from 2 and Sweden’s to 11 from 8. Finland’s stayed the exception with stocks down to 10 from 14 along with other best performers which included Denmark to 5 from 15, Lithuania, with stocks declining although modestly to 15 from 17, the UK to 9 from 13, and Romania to -1 from 2. Production trends observed in recent months ,down to 2 from 9, confirmed high stock levels in the Euro area (maximum value was reached in 1995 at 18) and France’s fell to 9 from 15 (with maximum production trends at 36 in 1995). In the EU 27, production trends dived, as most member states’ collapsed: in the Netherlands to 4 from 11, in Slovenia to -2 from 19 in Slovakia to 6 from 27 and in the UK by half, to 7 from 16. Romania even reached production trends (10) below its average, (14) and Germany’s nil edged close to its own -2 average.
Export order books in the Euro area also entered a downwards trend, sliding to -5 from -2 pushed down by Germany’s to 2 from 5, the Netherlands to 2 from 7 Italy’s to -20 from -17, Austria’s to -28 from -22, and Belgium‘s to -8 from 1. France’s climbed a very modest 1 from nil. The assessment of business situations over the past three months reflected this downward curve in the Euro area down but stable in France. The evolution of demand in the past three months corroborated this trend, dipping to 9 from 16 in France and similarly in the Euro area. Over the next three months, pessimism remains in the Euro area, as the indicator is expected to slide, unlike France’s projected to climb to 8 from 6 similarly to Finland’s to 28 from 24. As regards employment expectations, the Euro area’s worsened overall, down to -4 following two months of a negative yet stable -3, France’s declined further to -5 from -4. In the EU 27, Lithuania’s employment expectations dived to 14 from 18 and in Hungary to 20 from 25. Only two member states, the Netherlands and Cyprus, recorded stable indicators for that sector, respectively 8 and 18. Over the next three months, no improvement is expected as the indicator is forecasted to fall further in the Euro area to 9 from 11 and in France to 9 from 10. Selling price expectations remain unevenly spread: although they are expected to decline in the Euro area, down to 14 from 15 similarly to France’s to 13 from 15, Germany’s are expected to climb to 14 from 13 along with Portugal’s to 14 from 11 while Belgium’s expects lower prices to 9 from 13, along with Romania’s to 23 from 31, and Denmark to 8 from 17. By contrast, in the Czech republic, prices are expected higher to 12 from 9 along with Lithuania to 15 from 4. Two exceptions, the UK and Sweden, expect to maintain prices stable.
JULY 2008
Industrial Confidence Indicator records the hardest fall of the Euro area and the EU 27
FRANCE’s Industrial Confidence Indicator recorded the hardest fall to -11 from -6 of the Euro area and the EU 27 taking its Economic Sentiment Indicator to slid 5 points to 93.5 although well above the Euro area’s 89.5 and the EU 27 rating of 88.7. A series of negative indicators impacted France’s economic slow down : the Retail and Construction sectors confidence indicators dipped respectively to -10 (from -7 in June) and to -4 (from 6).
Production expectations indices fell to 6 from 2, nearly similarly to the Euro area’s 1 (from 4 in June) and the EU 27 1 (from 5). Germany’s production expectations fared similarly dipping to -1 from 3 along with Malta to -12 from -6 and the UK’s to -5 from 1. Denmark and Slovakia performed better with production expectations climbing respectively to 15 from 2 and to 10 from 8 along with the Czech Republic to 17 (from the previous month 14) Romania to 15 (13 in June) and Sweden, up 2 points from 2. Finland’s production expectations stayed stable at 2.
Order books slid similarly to production expectations in France, to -15 from -9, in Germany to -5 (from -2), in the Czech Republic to 5 from 12 and in Bulgaria to -21 from an already dire -16. Export order books in France shrank by half to -13 from June -6, Germany’s fell to -5 from nil, Spain’s plunged to -21 from -16 while Sweden’s recorded the strongest decline -31 from -9. The UK recorded the only order books relief and gained one point from 10. In the EU 27 and as a result, overall order books fell to -10 from -7 and in the Euro area to -12 from -9. Stocks of finished products consequently rose in France to 18 from June 14 and in the EU 27 despite Finland‘s jumping to 21 from 12 since Spain‘s fell to 16 from 22 and Germany‘s to 8 from 7. The Euro area’s order books performed better and only grew by one point to 11 from 10. Production trends observed in recent months in France added to the domino effect falling to 5 from 10 but in the Euro area’s rescinded to -2 from 5. Out of most substantial declines, Finland’s dived to 9 from 16, Bulgaria’s dived to 19 from 28, while Poland’s fell to nil from 4, two non Euro members. The Netherlands’ rose a modest 3 from 2. As a result of such dire perspectives, employment expectations in France deteriorated and fell to -13 from an already negative -10 and similarly in the Euro area, to – 7 from –4 and in the EU 27 to 11 from -8.
The UK recorded the biggest cuts expected with its indicator plunging to -29 from -23. Germany also sent its indicator into the red zone to -5 from -3.
Selling price expectations nevertheless rose, in France to 25 from 21 and more aggressively in the in the EU 27 to 23 (from 19) that the Euro area’s 27 to 20 (from 16 in June): Luxembourg’s indicator revealed that prices are expected to jump to 36 from 17, Finland’s to 27 from 13, the UK’s to 38 from 29 and Slovakia’s to 32 from 28. Inversely, expectations are lower in Bulgaria where the indicator declined to 26 from 31, along with Denmark to 10 (from 20 in June) along with Hungary to 20 (from 24).
Consequently, the manufacturing industry remains pessimistic for Q3 due to stagnating capacity utilizations, 82.9 in the Euro area and 82.8 in the EU 27, with France’s at 86.1 nearly stable compared with the previous quarter, and production capacities expected up on the same period : to 7 from 2 in France, to 11 from 7 in the Euro area and to 14 from 9 in the EU 27 since new orders are expected down: to an abysmal –15 from –5 in France. Similarly, export volume expectations remain on a downward trend and are foreseen to dive in France to -4 from 13 in the Euro area to 5 from 10, Germany’s to 10 from 14, and in the EU 27 to 4 from 11.
The assessment of business situations over the past 3 months reflected therefore a dire environment: down to -2 in France from 4, in the EU 27 to -8 from 2, and in the Euro area to -7 from 4. Italy’s collapsed to -42 from -6, the UK’s to -21 from -13, Austria’s to 2 from 10, Sweden’s to 21 from 28, the Netherlands to 6 from 12, German’s to 5 from 11 with one exception, Romania up to 21 from 18, unlike Latvia and Lithuania dipping each to -11 from -4. The evolution of demand over the past 3 months mirrored the assessment indicator and fell to 6 from 10 in France, in Germany to 8 from 17. The EU 27 by half to 4 and the Euro 27 to 4 from 10. The evolution of employment over the next 3 months stayed thus grim, with down staffing expected overall: in France the indicator fell to 2 from 6, in the EU 27 to 6 from 5 and in the Euro area more drastically to 3 from 7. The UK remained the exception with its indicator climbing to 8 from nil. Italy’s indicator shrank the most to -11 (from 2 in June) and Nordic member states followed this downward trend: in Finland the indicator fell to 1 (from 8) and in Sweden to 4 (from 13).
