31 JANUARY 2012

Capacity utilization in the manufacturing industry is projected mostly stable at 79.9% in the Euro area in the first quarter of this year, according to the European Commission's (EC) quarterly business survey, up three notches from the previous period but below a long-term average 81.4% recorded however in Q2 last year when corporate and sovereign downgrades had not yet occurred.
France's index is forecast at 83.9%, up by one percentage point, squeezed between a long term average 85.1% and a minimal value 71.3% lived through in Q3 2009, but five percentage points from a maximum capacity 90.9% in Q4 2000. In Germany, capacity utilization is projected at 85.3% unchanged from the previous quarter, slightly above its long-term average and equally to France, close to its maximum gauge in 1991. In Spain, the index is expected to remain unchanged at 72.5%, below its 77.9% long-term capacity but ten points away from its maximum value of 1998. Italy's gauge by contrast is projected to rescind one percentage point to 70.7%, five points below its long-term average performance and ten points from full momentum attained in 1990. 
 
In the UK, Europe's fifth economic weight and a non Euro area country, capacity is foreseen at 82.9% nearly half a point above the previous quarter's but very close to 84.8% maximum value in Q2 1995. Among dynamic Nordic states, Denmark, at 79.1% capacity utilization stands two and half percentage points below its long-term average but nearly ten points from its maximum value in Q3 2007. Sweden, at 82.8% of its capacity utilization is six percentage points behind its strongest performance back in Q4 2006 while Finland, at 75.1% stands a further 13.7% from its maximum value in Q1 1995.

The stabilization is also projected in eastern Europe by ricochet: Poland, the largest economy, foresees capacity utilization unchanged at 74.3% compared with a high 81.1% observed in Q1 2008. One exception to the rule remains the Czech Republic, a major auto manufacturer partner to its western counterparts, where capacity utilization is expected up by nearly two percentage points to 84.6%, yet more than six percentage points below its maximum value in Q2 2008. The estimated number of months' production assured by orders on hand in the manufacturing industry is also expected to remain linear in the Euro area to 3.2 months equally to the previous quarter and with the region‘s long term average, but close to a maximum 3.7 months observed in Q3 2007 as major economies projections herald no gap ahead. France's index, up to 4.5 months the fourth quarterly consecutive increase although successively by one inch nearly shadows its maximum value of 4.8 months in Q4 2001. Germany projects 2.9 months compared with a maximum 3.3 months in Q3 1990. Spain and Italy are less confident due to their respective public debt related austerity programs while the UK foresees 4.2 months' production assured by orders on hand in the manufacturing industry compared with a maximum value 4.4 points reached in Q1 2008.

Export volume expectations for the first quarter are up to 5.4 points in the Euro area (from 2.5 points) and are forecast to rise to positive territory for European Union (EU) countries to 5.8 points due to strong US and China data announcements in addition to the Euro‘s lower exchange rate, a monthly average USD 1.29 compared with USD 1.37 in October.  France, Germany, Italy, and Spain, the single currency region major economies, project on average three-point gains on such markets. The UK's index is more buoyant, and foresees a leap to 0.7 points (from -12.2 points).