EU Commission Indexes Show Slight Uptick
The EU Commission survey for the EMU and its members ticked up to 93.8 in November from 93.5 in October. Still, the overall index has a queue ranking on data back to November 1990 in its 26th percentile. The five component indexes for November showed an improvement in consumer confidence and in construction against a deterioration in the industrial gauge and unchanged month-to-month readings for retail and services.
In terms of standing, the construction sector in the EMU has a solid 72.8 percentile standing while retailing has held at a 55.4 percentile standing; both are above historic medians. However, the industrial sector ranks in its 26.7 percentile, with services in their 40.4 percentile and consumer confidence even weaker at its 17.9 percentile - all three are below their respective historic medians.
All five sectors plus the headline continue to reside below their pre-COVID levels of January 2020, a period of nearly four years. The EMU gauge has been below its January 2020 level 72% of the time. Only the industrial sector has been below its January reading less, only about one-third of the time. All other components have been below their January 2020 levels more than 75% of the time over the past nearly four years.
Table 1
Table 2 shows the percentile standing rankings for the major sectors in the four largest EMU economies. Industry and consumer confidence have standings below their historic medians everywhere (rankings below 50% mark). Retailing and services have above-median standings in Italy and Spain. Construction has strong standings in both Italy and in Spain as divisions among the largest economies begin to emerge.
Table 2
Country level data show details for 18 EMU members. Among these, seven show declines in the EU sentiment gauges in November. Eleven declined in October and eight declined in September. Weakness in the EMU is widespread even when it is not dominant. The unweighted percentile standing across countries for the EU Commission sentiment gauges in November is at the 26.4 percentile mark, quite a weak number for an average. Only two members have EU Commission index standings above their historic medians: Greece at 61.5 percentile and Cyprus at its 64.7 percentile.
The recent two-month increase in the overall EMU index is an extremely minor event and may focus more on the fact that conditions are not worsening more than on the notion that conditions are improving. There is not much in the way of positive news here.
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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