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Business | OCT. Economic Confidence stable desp . . .
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Source:E.C.
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OCT. Economic Confidence stable despite Euro area bedlam
4 NOVEMBER 2011
Economic Confidence in the Euro area inched down to 94.8 points (from 95 in September) and equally in the EU 27 to 93.8 points (from 93.9) as the lingering 18 months Greek debt crisis was topped by the European Commission's confirmation of an economic halt in the making, the Euro area's banking sector's obligation to reinforce financial institutions capital ratios to sustain a systemic shock, Dexia Bank dismantling, Italy's and Spain's sovereign bonds downgrade by Credit Rating Agencies (CRAs), the enlargement, at the 11th hour, of the Euro area's bail-out fund, the European Financial Stability Facility (EFSF), and trading markets accrued volatility amid stop-and-go signals.
Ahead of the Euro area's Summit's milestone, the future of the Euro area through the EFSF enlargement, industrialists in the single currency region adopted a wait and see approach as confidence stayed mostly unchanged: France's index even rose to 97.2 points (from 96) and Germany's edged down to 104.1 (from 104.9). In Italy, the third economic heavy weight, confidence inched up to 89.3 points (from 89) as austerity measures introduced by government sent a strong signal to CRAs about the country's determination to reduce its public debt burden. Spain's index performed equally and stood at 90.8 points (from 90.9) while in the UK, a non Euro area member state but the Union's fifth economic major, confidence remained unchanged at 89.5 points.
Nordic states followed the trend with confidence in Finland at 95.4 points (from 96.5) and Sweden's at 100 (from 102.8).
In Portugal, confidence picked up to 77.7 points (from 73.2) as the country's third tranche disbursement, € 11 billion out of a total € 78 billion financial assistance package voted by EcoFin ministers in May upon the country‘s request, received the Troika's green light. In Greece, additional austerity measures were met with general strikes as more cuts on salaries heralded accrued misery to come for most nationals: the country's economic confidence index fell over three points to 67.5
East European member states performed unevenly but stayed mostly cool headed faced with the Euro area's debacle: in the Czech Republic, a major western Europe auto manufacturing partner, confidence rose four points to 94 while Poland, the region largest economy, left confidence rather steady at 92.6 points (from 93.2). Romania's index was 90.8 points (from 91.6) while Slovenia's dipped more substantially to 89.9 (from 93.4).
Due to the Euro area's context, industrial confidence in the region moved down to -6.6 points (from -5.9) dragged down by several countries and equally in the EU 27 to -6.8 (from -5.7). France' s index climbed to -7.6 points (from -8.3) and Spain's rose to -13.8 (from -16) while by contrast Italy's and Germany's respective indices dipped further. The UK's index dropped to -11.4 points (from -6.8). Out of the Union, the Czech Republic remained an exception with industrial confidence up to 4.2 points (from 1.1) along with Slovakia, while Romania, Poland, Slovenia, and Nordic states fell further in negative territories.
Production expectations accounted for such contrasted moods as 14 states out of total 27 stayed in the black. As a result, the Euro area's index fell to -0.1 points (from 0.3) and the EU 27 took a deeper fall to -0.4 points (from 2.5). France's index climbed to 5.1 points (from 2.5) as the number of months estimated in production assured by orders in hand in the manufacturing industry increased to 4.4 months for the fourth quarter (from 4.2 months in Q3). In Germany, an export-led economy impacted more substantially by the general slow down, production expectations turned negative to -0.9 points (from 1.1). Spain's index climbed to -4 (from -5.5) and Italy's to -1.3 (from -1.9).
The UK's index dived to -6.7 (from 7.8). The Czech Republic and Slovakia remained upbeat as their respective indices leaped, to 16 points (from 7.7) and to 24 (from 13.7) while Romania and Poland were more skeptical sending their indices down by two points on average.
Order books mirrored the production expectation trend : the Euro area's index fell to -13 (from -11.9) and the EU 27 less drastically to -13 as well (from -12.3). France's index moved up three points to -13.6, while Germany's index fell to 2.9 (from 5.8). Spain's index jumped to 27 (from -29.1) while inversely Italy's shed two points to -27.8. The UK's index rose to -5.4 points (from -6.6). Denmark and Germany posted the only positive indices out of the Union's 27 countries and Sweden even recorded a sixth consecutive index contraction. The Czech Republic followed the trend however with order books down to -3.9 points (from -1.3) equally to Poland's index down to -45.8 points (from -46.6). Due to the Troika's context, the index moved up in Portugal but worsened in Greece.
Stocks of finished products reflected the economic slow down: the Euro area's index was steady at 6.6 points (from 6.1) and the EU 27 at 7.1 (from 7.3). France's index climbed to 14.2 points (from 11.5) and Germany to 4.2 (from 2.7). Spain's index fell to 10.3 points (from 13.3) while Italy's was 1.9 points (from 1.7). In the UK, the stock index was at 21 points (from 21.5).
Production trends in recent months confirmed the economic slow down triggered by a lack of confidence and therefore demand as the Euro area's index was impacted the most, a two point dip to -3.2 points (from -1.3) while the EU 27 edged up to 0.6 (from 0.3). Spain's index took the biggest plunge, to -17.9 (from -9.1) while by contrast the UK's leaped to 16.2 points (from 4.3). France's index fell to 4.2 points (from 5.6) and Germany's slid to 5 (from 4.4).
Consequently, the export order books index stayed overwhelmingly in the red except for Denmark. The Euro area's index fell to -13 points (from -11.7) and the EU 27 contracted further as well to -12.9 points (from -12.2). The Euro's exchange rate against currencies, a steady monthly average USD 1.37 had no positive impact on foreign demand due to uncertainties over the region's future. In Italy, the index fell to -25 points (from -20.7) but Spain's rose to -21.2 points (from -23.9). Germany's index turned negative to -0.3 points (from 0.6) for the first time in one year. France's index worsened and fell to -15.4 points (from -12.8). The UK by contrast, a non Euro area country, posted an export order books index gain of over four points to -3.6 as its major export market, the USA, showed signs of industrial resilience.
Employment expectations therefore fell consequently, to -2.4 points in the Euro area (from -0.4) and equally in the EU 27. France's index dived over four point to -6.7, Spain's to -13.3 while Italy's was less alarmist to -8.4 points (from -7.9). The UK's index rose to -0.7 points (from -2.4).
Selling price expectations were forced down by the turbulent context due to commodities volatility on producer prices and the necessity for industrialists to remain competitive. The Euro area's index was pushed down to 5 points (from 6.9) and further down in the EU 27 to 5.4 points (from 7.6). France's index rescinded to 6.1 points (from 8.4) while Spain's was slashed to -5.1 points (from 1.5). Italy and Germany were more subdued in their approach unlike the UK were the price expectations index was cut nearly by half to 8.9 points.
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