Euroland Growth at a Glance

June 29, 2011

The euro area economy lost momentum late in the second quarter but continued to expand on the whole.  The table below looks at five key data series, comparing June readings to second-quarter average scores, first-quarter averages, December 2010 results, and lows reached in late 2008 or early 2009.  The indicators are Euroland’s composite purchasing managers index (Comp PMI), the German business climate index (IFO), Euroland’s economic sentiment index (ESI), consumer confidence (CC), and the retail PMIs.

  June 2Q11 1Q11 Dec 2010 08/09 Low
Comp PMI 53.6 55.8 57.6 55.5 36.2
IFO 114.5 114.3 114.8 114.4 82.6
ESI 105.1 105.6 107.4 107.0 69.6
CC -9.8 -10.4 -10.6 -11.0 -26.5
Retail PMI 48.8 49.9 53.1 52.9 41.4


The composite purchasing managers index encompassing activity in manufacturing as well as services was 2.2 points lower in June than the entire mean for the second quarter but still comfortably above the 50 “no change” line.  Conditions remain much closer to recent cyclical highs than the Great Recession’s low.  In the largest economy of the euro area, Germany, the business climate in June was quite close to its peak.  Overall economic sentiment in Euroland was only 0.5 points less in June than its 2Q average and 35.5 points better than the all-time low.  Consumption has been a perennial laggard and continues to be one.  Consumer confidence, a sub-category of the ESI index, had readings near minus 10 throughout the first half of 2011 including minus 9.8 in June. 

Retail PMI results for June were released today and, like the manufacturing and non-manufacturing purchasing manager surveys, connote expansion when above 50 and contraction when below that line.  The score in June of minus 48.8 was the same as in May, dragging the quarterly average a shade below 50 and to 3.2 points below the first-quarter mean.  Much less improvement has occurred in household demand since the recession than on the productive side of Euroland’s economy.  June saw France’s retail PMI worsen to a sub-50 reading of 49.2 from 51.7 in May, 56.3 in April and 59.6 in March, while Italy’s survey remained deep in the red at 42.0 after 41.7 in May and 43.1 in April.  The 2Q average of 42.3 was the lowest in nine quarters.  German readings on the retail PMI of 53.4 in June and 53.0 on average in 2Q weren’t bad but remain unrepresentative of the euro area as a whole.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.



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