French IP Rebounds WithoutEnthusiasm

France's IP was kicked down in November as a transit strike slowed the France economy. A December rebound was expected. But the rebound is less that the November drop, stirring suspicions that growth may be more fundamentally impaired in France. Certainly Q4 is looking weaker. IP in the quarter to date period (which is now for the full quarter) is up by just 1.1% SAAR. This compares with a 4.8% rise in the previous quarter.

The sector growth rates do not show a consistent pattern. The consumer sector by itself does show a clear trend to deceleration. Intermediate goods output is waffling around zero. Capital goods output is still strong. Strength in capital goods – or relative strength – is one continuing feature of Euro Area economies. Even though the consumer sector is weak capital goods output has remained strong with few exceptions in Euro Area nations. The chart shows that consumer and intermediate goods output trends are more of problem while the capital goods trends continue to be firm.

Italy is the most troubled of the large EMU economies. It’s Industrial Output is declining on a clear downward trend. For its three major sectors, Consumer goods, Intermediate goods and Capital goods output trends are declining over horizons of three months, six months, and twelve months. The degree of deceleration is becoming more intense.

Italy is the exception to the Euro Area economy ‘rule’ since the output of even capital goods is weak there. Indeed, the capital goods sector has the sharpest negative growth rate over three months at -23.6%.

The preliminary data for January 2008 for industrial production in the Ukraine show a minimal increase of 0.06% and that for Kazakhstan, a 2% decline, as can be seen in the first chart. Industrial production in both countries, which has been growing faster than that in the United States and the European Community over the past several years appears to be slowing up, as can be seen in the second chart. (All the data have been indexed to 2001=100 for comparative purposes.)

Data are available in the Ukraine for the value of production and its components. Machinery is by far the most important major component, as can be seen in the third chart. Given the value of industrial production it is possible to derive the importance of industrial production in the total economy. In 2006, industrial production accounted for about 7% of Gross Domestic Product, the value of production being 38.364 million Hryvania and Gross Domestic Product , 537,667 million Hryvania (5.05 Hryvania = $1.00).