Source:E.C.

2 FEBRUARY 2012

Economic Confidence in the Euro area inched up half a point to 93.4 from the previous month prudent stance, a sign of industrialists fatigue about the return of the Euro area's debt crisis triggered by banks negotiations over additional haircuts to their Greek sovereign debt exposures, and Europe's bail-out fund downgrade although by one notch to AA+ due to France's similar fate, its second major contributor behind Germany. The Euro's  exchange rate decline to USD 1.29 nevertheless offset alarming headlines which included nine countries lower ratings, as excellent job data from Germany and the USA, and higher than forecast growth in China, 8.9%, heralded the opening of export markets. However, assurance among the region's major economic weights reflected their respective national contexts: France's index, jolted by Standard and Poor's decision to lower its sovereign rating with a negative outlook, fell two points to 91.4 and despite strong investors demand for medium and long term debt issuances. Italy's index dipped one point to 84.3 as T-bills 7% interest rate and austerity measures brought down moral.  By contrast, Germany's gauge rose two points to 106.6 upon reassurance of its triple A conservation and Spain's climbed nearly two points to 92.2 as demand for long-term sovereign bonds demonstrated investors confidence and higher exports prospects.  The UK, a non Euro area country but Europe's fifth largest economy, recorded a five point leap to 93.6 as the country's sovereign rating, equally to Germany's, was reaffirmed, and strong US data, its lead export market, boosted moral.

Economic assurance among east European member states was overwhelmingly restored by overseas data: in the Czech Republic, Bulgaria, Latvia, Romania and Slovakia, indices rose on average three points and including in Poland, the largest economy. Nordic states mood was more subdued, even linear in Denmark and Finland while Sweden's dropped one point.

Industrial confidence thus matched economic concerns as the region's index stayed unchanged at -7.2 points: France's dropped six points to -16.6 since national statistics announced a mild recession in the first quarter of this year. Italy's gauge was prudent and stayed mostly unchanged at -11.8 while export-led Germany's moved into positive territory to 1.6 points. Spain's performed equally and climbed four points to -14.8. In the UK, industrial confidence jumped seven points to -6.  

Production expectations aligned with national moods: the Euro area's index inched down to 1.8 points as pessimistic France slipped into negative territory to -3.6 points followed by Italy two-point drop to -2.4 points. Germany's index jumped four points to 7.4 and Spain's by over half to -2.5. In the UK, the gauge leaped over ten points to 11.8, the biggest increase in over eight months. Two east European member states proved optimistic, Poland and Romania, with their indices up respectively six points to 5.7 and four points to 8.9. By contrast, dynamic Nordic states Finland and Sweden stayed in the red while Denmark slowed down two points.

Order books consequently mirrored such trends: the Euro area's edged down to -16.8 as France's index plummeted over ten points to -29.3 due to higher than average stock levels in the transport equipment sector, and including the automobile industry, as well as chemicals.  Spain's gauge contracted by one point to -37.2 a precautionary sign due to the country's fragile context. In Italy, the index stayed stable at -31 points while the UK's climbed ten points to -13.  Slovakia performed best out of east European member states, up eight points to -18.1 while Poland's index fell one point to -43.2  Production trends observed in recent months nevertheless showed signs of an industrial pick-up but unevenly: the Euro area's index rose two points to -4.3 lifted by France's entry into positive territory to 0.5 points and Germany's equal rise to 5.2 points. In Spain and Italy, expectations froze at their previous month levels, respectively -27.2 points and
-22.7. The UK's upbeat mood was reflected in its barometer, up to -0.7 points (from -11.7). Poland's gauge translated a major slow down, down five points to 1.5 due to the Euro area's feeble consumer demand, while inversely Slovakia's eight-point surge to 20.3 reflected its single currency membership status, and its expanding western partnership trade. With intra-commerce strongly established between Nordic states, Finland and Sweden expressed their respective major production trend gaps via their indices, down over eight points each.  Denmark's gauge stabilized above 11 points, and for the second consecutive month.

The export order books index was consistent with all previous parameters. The Euro area's fell one point to -13.8 dragged down by France's five point slide to -19.1 due to same heavy players lower than average export levels, equally to domestic orders. Italy's and Spain's indices climbed one symbolic point each but remained in the red. The UK's shot up eight points to -25.8. The Czech Republic, Slovenia and Slovakia expressed strong confidence thanks to their respective indices, up over eight points each, unlike Nordic states, while Poland and Romania, more skeptic, pushed down their indices two points. 

Due to stronger export prospects, employment expectations in the Euro area rose despite the region' s record unemployment rate, 10.3%.  East European countries joined the positive trend while Finland and Sweden demonstrated accrued pessimism, unlike Denmark. Selling price expectations demonstrated industrialists resilience into keeping market shares, as price cuts are anticipated in the coming months. France's index fell two points to 6.3, Italy's was slashed by nearly three points to 4.4 and Spain's a further four points to -2.2 Germany and the UK by contrast kept their price levels stable, respectively at 10 points and 11.3 points. Poland took a similar stance with its price gauge at 10.6 points, unlike Romania's three point cut to 7.4. Sweden and Finland rose their expectations significantly, while Denmark's pushed prices down although by a modest half a point to 2.9 to boost demand accordingly.