Eurozone Industrial Production Continues to Plummet

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    Helmholtz Watson

    Industrial production continues to slide Eurostat reports, falling…


    Helmholtz Watson

    More European Weakness:

    The German economy grew by 1.5 percent in 2018, following a 2.2 percent expansion in 2017, the weakest growth rate in five years amid a global economic slowdown, persistent trade tensions with the US and the risk of Britain leaving the EU without a deal.

    Household consumption rose at a slower 1 percent (vs 1.8 percent in 2017) and government spending advanced 1.1 percent (vs 1.6 percent).

    Export growth slowed to 2.4 percent (vs 4.6 percent) and import growth eased to 3.4 percent (vs 4.8 percent).

    Fixed asset investment expanded 3 percent (vs 2.9 percent) boosted by machinery and equipment and construction. Adjusted for calendar effects, growth slowed to 1.5 percent from 2.5 percent in the previous year.

    Data from last November showed the economy expanded a calendar-adjusted 1.1 percent in the third quarter of 2018, following a 2 percent growth in the previous three-month period.

    GDP Annual Growth Rate in Germany averaged 2.02 percent from 1971 until 2018, reaching an all time high of 7.20 percent in the first quarter of 1973 and a record low of -6.80 percent in the first quarter of 2009.

    Helmholtz Watson

    ECB’s Draghi in European Parliament

    Recent developments have been weaker than expected
    Significant amount of monetary policy stimulus still needed
    Uncertainties notably related to global factors. They remain prominent

    EURUSD Fell From 1.1452 to 1.1397 on it – though GBP was falling ahead of Brexit Vote

    Helmholtz Watson

    Germany January ZEW survey Current Situation 27.6 vs 43.0 expected

    The German ZEW indicator fell to its lowest point since January 2015 with trade friction and slowing China growth catalysts for the decline.

    Expectations -15.0 vs -18.5 expected Prior -24.1

    Eurozone expectations -20.9 vs -21.0 prior

    ZEW Comments

    Negative factors such as rejection of the Brexit deal by UK parliament, weakening growth in China in Q4 already anticipated
    Financial market experts already considerably lowered expectations for economic growth in past months


    Eurozone January advance Consumer Confidence -7.9 vs -6.5 expected
    Prior was -8.3 (revised from -6.1) a 2 year low

    The revision to the prior is the worst since October 2017.

    Consumer sentiment edged 0.2 points lower to -7.8. Both indicators remain above their respective long-term averages of -11.3 (Euro Area) and -10.5 (EU).

    Consumer Confidence in the Euro Area averaged -10.65 Index Points from 1985 until 2019, reaching an all time high of -1.90 Index Points in May of 2000 and a record low of -24.40 Index Points in March of 2009.


    [size=5][color=red][b] Eurozone January flash manufacturing PMI 50.5 vs 51.4 expected

    Key findings:
    ▪ Flash Eurozone PMI Composite Output Index(1)
    at 50.7 (51.1 in December). 66-month low.
    ▪ Flash Eurozone Services PMI Activity Index(2)
    at 50.8 (51.2 in December). 65-month low.
    ▪ Flash Eurozone Manufacturing PMI Output
    Index(4) at 50.4 (51.0 in December). 67-month
    ▪ Flash Eurozone Manufacturing PMI(3) at 50.5
    (51.4 in December). 50-month low.

    “The Eurozone economy slipped closer to stall speed in January, with companies reporting the first drop in demand for over four years. The disappointing survey data indicate that GDP is rising at a quarterly rate of just 0.1%.


    Germany January flash manufacturing PMI 49.9 vs 51.5 expected

    Key findings:
    ▪ Flash Germany PMI Composite Output Index
    at 52.1 (51.6 in Dec). 2-month high.
    ▪ Flash Germany Services PMI Activity Index(2) at
    53.1 (51.8 in Dec). 2-month high.
    ▪ Flash Germany Manufacturing PMI(3) at 49.9
    (51.5 in Dec). 50-month low.
    ▪ Flash Germany Manufacturing Output Index(4)
    at 50.2 (51.5 in Dec). 69-month low.
    France January flash manufacturing PMI 51.2 vs 50.0 expected

    “The Germany PMI broke its recent run of successive falls in January thanks to a stronger increase in service sector business activity, but the
    growth performance signalled by the index was still one of the worst over the past four years.

    “Worryingly for the outlook, the recent soft patch in demand continued into the New Year. Firms are also showing greater caution towards hiring with job creation at a 25-month low, though in a historic context these are still healthy employment figures.

    “Manufacturing fell into contraction in January as the sector’s order book situation continued to worsen, showing the steepest decline in incoming new work since 2012. Weakness in the auto industry was once again widely reported, as was a slowdown in demand from China.


    France January flash manufacturing PMI 51.2 vs 50.0 expected

    Flash France PMI shows a stronger contraction in the private economy which was driven by the service sector. Composite Output Index falls to 50-month low of 47.9 (48.7 – Dec). Protests and slowing global growth pose challenging environment for France.

    Key findings:
    ▪ Flash France Composite Output Index(1
    ) at 47.9
    in January from 48.7 in December (50-month low)
    ▪ Flash France Services Activity Index(2
    ) at 47.5 in
    January (49.0 in December), 59-month low
    ▪ Flash France Manufacturing Output Index(3
    ) at
    49.9 in January (47.6 in December), 2-month high
    ▪ Flash France Manufacturing PMI(4
    ) at 51.2 in
    January (49.7 in December), 3-month high

    “Private sector firms in France reported a further contraction in output during the opening month of 2019. The latest decline was the fastest for over four years, even quicker than the fall in protest-hit December. The strong service sector that had supported a weak manufacturing sector in the second half 2018 declined at a faster rate in January. Meanwhile, manufacturers recovered to register broadly-unchanged production.

    “Despite the continuation of ‘gilets jaunes’ protests, it is unclear whether the latest weak performance was caused by the resulting disruption, or whether the anticipated global economic slowdown for 2019 is already beginning to take hold.

    “Although firms reported higher confidence in January, other forward looking indicators such as new orders fell at the fastest pace for over four years. This suggests further weak performance for France in the coming months.”


    Europe politicians with their arrogant take on Brexit is not helping them looking at these dismal reports


    More weak German Data but better than expected:

    ZEW Indicator of Economic Sentiment for Germany rose +1.6 points from the previous month to -13.4 in February 2019, beating market expectations of -14.0.

    Yes improved slightly, it is still in negative territory and remains well below the long-term average of 22.4 points, suggesting the financial market experts do not expect any rapid recovery in German economy over the next six months.

    Meanwhile, the assessment of the current economic situation dropped by 12.6 points to 15.0 in February, amid a renewed fall in industrial production, stagnant incoming orders and weakness in foreign trade.

    Zew Economic Sentiment Index in Germany averaged 22.30 from 1991 until 2019, reaching an all time high of 89.60 in January of 2000 and a record low of -63.90 in July of 2008.


    Euro ZEW Economic Sentiment Index at -16.6

    Weaker than Germany but likewise improving off weak numbners


    Construction output in Euro Area rose 0.7 percent from a year earlier in December of 2018

    Down from upwardly revised 1.1 percent rise in previous month but below market expectations of a 2.1 percent gain.

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