EMU Indices Advance

EMU and EU sentiment rose and rose strongly in October. Sentiment rose in four of the five largest EU economies. Spain was the sole example of backtracking in October. We include in the table measures of the queue percentile standing for index components and countries. The queue tells you among all ranked values of a measure, how high it stands in its ordered queue. For the most part the component standings of the EU components are moderate. The exception is retailing which has a shorter history and resides in the top 5% of its ordered queue (95-plus percentile). The industrial sector is the next strongest reading, in the top 23 percent of its ordered queue. The queue percentiles offer stronger assessment of the position, or standing, of the various measure than do the rank percentile measures.

On balance EMU is not yet strong and is still engaged in the recovery process. Germany is doing well standing in the 92th percentile of its queue. The other large EMU nations have standings of the 66th percentile for France, 34th percentile for Italy and 17th percentage for Spain. The UK, an EU member, stands in the 44th percentile of its range. Except for Germany these are unimpressive standings.

Despite concerns, the EMU region continues to improve. Germany is at the forefront of the improving movement but other counties continue to show progress.

Industrial confidence is one sector with a high standing. It is doing well on strength in order volume and improvement in the production trend in EMU. Production expectations and export order volume also are ranked strongly in this sector.

Consumer confidence is only a middling case of improvement and, its sector standing is only the 59th percentile of its range. Its strength is being led by the fact that consumers have been able to save. Unemployment expectations actually rose a bit in October after having fallen through September over a period of seven months in a row. The prospect for making major purchases remains dim.

Retailing that stands in the top 21 percentile of its queue (that’s a much lower standing in EMU than in EU). It is being led by the improvement in current business situation and in the situation in the future that is expected to get better.

The services sector is weak residing near the bottom third of its queue in EMU. Its strongest components are in their 50th percentile and include current and expected employment.

On balance the Euro-Area continues to make progress. We do worry a bit about next month when the French demonstrations will have taken their toll. But Europe has been advancing in the face of many concerns and it appears still to have momentum.

EU Sectors & Country Level Overall Sentiment EU Oct
10 Sep
10 Aug
10 Jul
10 %tile Rank Max Min Range Mean By
Queue
Rank% Overall
Index 104.1 103.6 103.1 102.1 76.6 96 115 68 47 100 62.1% Industrial 0 -1 -2 -4 84.8 57 7 -39 46 -8 77.5% Consumer
Confid -12 -12 -11 -14 58.8 141 2 -32 34 -11 44.3% Retail 3 2 1 0 90.3 11 6 -25 31 -6 95.7% Const. -28 -29 -31 -31 30.4 178 4 -42 46 -18 29.6% Services 5 5 5 6 57.1 124 32 -31 63 13 26.6%   % M/M Oct
10 Based on Level Level   EMU 0.9% 0.9% 1.2% 104.1 73.3 100 116 71 46 100 60.5% Germany 0.3% 1.8% 1.0% 113.5 84.0 18 121 75 46 100 92.9% France 3.3% 0.3% 2.9% 106.3 72.2 85 119 74 44 100 66.4% Italy 0.3% -1.2% -0.9% 97.1 53.3 166 120 71 50 100 34.4% Spain -0.2% 1.2% 1.0% 90.5 42.1 208 116 72 44 100 17.8% Memo:UK 0.3% -2.1% 1.5% 100.5 70.5 140 115 65 50 100 44.7% All since Oct 1994 253 -Count Services: 169            -Count Sentiment is an index, sector readings are net balance diffusion measures