EMEA’s economic recovery remains volatile

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As has been the case throughout 2012, EMEA’s economic recovery is still quite sluggish. Unemployment remains well above average in many nations. Business confidence is weaker than usual, as monetary units continue to depreciate throughout the region. And, high inflation is directly influencing the purchasing power of consumers, as they have had no choice but to establish tighter budgets for themselves.

But, as the third quarter draws to a close, are there any signs that progress is occurring? Are consumer purchases increasing? Has inflation declined to more average levels? Are input and output production prices beginning to rise?

The following data, particularly concerning business and consumer confidence, inflation, and producer prices, provide a clearer outlook on EMEA’s present economic situation.

Euro Zone:
For the first month since April, the Euro Zone’s annual Consumer Price Index (CPI) rose by 2.6 percent in August, a 0.2 percent increase when compared to July’s index. Since January, the region’s CPI has risen on an annual basis by 2.4 to 2.7 percent. Therefore, economists were not surprised by August’s upturn; as a matter of fact, prior to the release of recent inflation figures, many economists had projected the index would rise by either 2.5 or 2.6 percent. As economists look ahead to the fourth quarter, many believe annual inflation will continue to increase at a similar pace, likely rising by 2.3 to 2.8 percent.

France:
From March to July, national manufacturers’ confidence slowly weakened, declining from 97 to 89. However, the steady decline finally ended last month, as the confidence measurement climbed marginally, rising to 90. In spite of the rise, August’s measurement was the second lowest of 2012, ten points below its long-term average. Two of the measurement’s sub-indexes, recent changes in output and demand and order levels – export, also increased last month, while two other sub-indices, finished goods inventory level and general outlook for manufacturing production, remained stagnant, at 12 and -44, respectively. A majority of economists believe the confidence indicator will still be below its long-term average of 100 for the remainder of 2012.

Italy:
After rising slightly in July, Italy’s consumer confidence declined once again in August, falling to a near record low of 86. The measurement has now weakened on a month-to-month basis for five of the last six months, decreasing by more than 10 points since March. According to the Italian Statistics Office, three of the index’s four sub-indices also deteriorated from July to August, including the economic, personal, and future measurements. But, for the first month since March, the index’s current sub-index rose on a month-to-month basis, climbing to 94. In spite of the increase, many economists believe consumer confidence will be lower than usual this fall, as regional unemployment and inflation remains high.

Spain:
With Spain’s national unemployment rate lingering above 25 percent, a majority of economists were not surprised by the nation’s latest economic data, which revealed a reduction in business confidence last month. After all, confidence has fallen on a month-to-month basis for four of the last eight months, as the year’s highest measurement, -14, was recorded in January. At -21, August’s index is the lowest of 2012, nearly four points lower than this year’s average of -16.75. Unless Europe’s debt crisis and Spain’s employment situation improves, there is currently no indication that national business confidence will uptick prior to the end of this year’s fourth quarter.

United Kingdom:
According to the Office for National Statistics’ most recent Producer Price Index measurements, the United Kingdom’s input prices rose by 1.4 percent from August 2011 to August 2012, the first year-to-year increase recorded since May. Although the gain is still well below February’s year-to-year increase of 7.7 percent, the rise was certainly welcomed by national economists, as six months had passed since the annual measurement augmented on a month-to-month basis. The Office also revealed that the country’s output prices index, for all manufacturing, also upturned last month, rising by 2.2 percent from August 2011 to August 2012; since January, the index has risen by 1.8 to 4.1 percent. Furthermore, national petroleum and Brent Crude prices each rose from July to August, by 3.2 and seven percent, respectively.

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