EMU IP Trends Are Weak Except for Consumer Goods
European IP trends are muted in May as the headline fell by a sharp 0.6% month-to-month after coming up flat in April. Manufacturing output fell by 0.8% month-to-month. Output in May fell in consumer durable industries, for intermediate goods and for capital goods. In seven of thirteen EMU members presented in the table output also fell in May. Month-to-month changes in output, while admittedly are quite volatile, show flip-flopping as 46.2% of table reporters demonstrate accelerating output in May compared to 53.8% in April and 30.8% in March.
EMU output is in the process of a ‘soft acceleration.’ I term it as such because growth rates get progressively larger from 12-months, to 6-months, to 3-months. But all these growth rates are negative. So, the declines are becoming less pronounced. Manufacturing displays the exact same general characteristics.
Sector growth rates sequentially show consumer goods output growing on all horizons and engaged in a steady sequential acceleration. Consumer durables are closer to showing a declining trend on all negative sequential rates of growth. Nondurable consumer output is close to a pure sequential acceleration on very strong growth over three months and positive growth over all three sequential periods. Intermediate goods have no clear trend, but output does decline on all horizons. Capital goods output is also trendless but logs a rise over three months after significant declines logged over six months and 12 months.
The EMU median shows three negative numbers across the 13-reporting members. With acceleration across these members fading from 58.3% over 12 months and 66.7% over six months to 33.3% over three months.
Quarter-to-date (QTD) growth shows a gain for the EMU over all as headline IP is up at a 0.2% pace and manufacturing is up at a 0.7% annual rate. However, across 13 members in the table, eight report QTD declines in manufacturing sector output. However, there are three showing growth QTD that is very strong growth, of 20% or more, and another showing growth of nearly 17% (Belgium).
Output in EMU countries flounder through May. The trends are mild or muted even where they are somewhat positive.
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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