Confidence and employment trends were unpredictable once again

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Prior to the release of EMEA’s latest confidence, inflation, and employment figures, a majority of global economists were unsure of what to anticipate. After all, in spite of the region’s current economic recession, February and March’s employment and confidence data was more encouraging than it had been in months.Just as some economists doubted the region would recover from its double-dip recession in the near future, recent data indicated otherwise. As a result, some European economists believed slight job growth, as well as weakened inflation, would be noticed in the region for the third consecutive month.

But did such job growth trends actually continue in April? And, if so, which countries reported the most extensive economic progress? Is Europe, and the greater EMEA region, finally on the path towards full-fledged economic recovery after all?

Euro Zone:
Throughout the second half of 2011, the euro zone’s business and consumer confidence index generally followed a downward trend, falling from 105 in June to 98 in December. Unfortunately, the first four months of 2012 have been no exception either, as the index has remained well-below its long-term average of 100. In fact, with April’s most recent index measurement of 92.8, the index has now been documented at or below 94.4 since last September. Of note, four of the measurement’s five indices fell from March to April, including industrial, construction, consumer, and services. As the area’s mild recession continues, expect confidence levels to steadily decline this summer.

For the first month since December 2010, France’s consumer confidence measurement rose to 88 in April, which is still well below its long-term average of 100. Since January, the measurement has increased by six basis points. Six of the measurement’s eight sub-indices also augmented from March to April, including past and future financial situations, past and future living standards, servings intentions, and unemployment outlook. Each of these sub-indices is also currently lower than their usual averages. As French employment remains low, economists are not presently anticipating a significant rise in consumer confidence anytime soon.

In spite of Italy’s lingering economic recession, some economists projected the nation’s business confidence measurement would upturn from March to April. However, as can be expected, the country’s economic slump led to a weakening in business confidence, as the measurement fell from 92.1 to 89.5 in April. Despite such a sharp decline, two of the measurement’s three sub-indices, current orders and current inventories, remained unchanged last month, at -39 and one, respectively. -39 indicates that more French manufacturers reported a decline in orders than those who reported a rise. The production outlook sub index actually decreased from March to April, from 0 to -4, signifying that French manufacturing production will likely continue to drop.

In early May, the Russian government released its latest inflation figures, which revealed that year-to-year consumer prices dropped from 3.7 percent in March to 3.6 percent in April. On a month-to-month basis, food, nonfood, and service prices all declined from March to April, by 0.2, 0.4, and 0.3 percent. Despite the nation’s weakening inflation, The Central Bank of the Russian Federation decided to retain its refinancing rate, overnight deposit rate, and overnight auction-based repurchase rate at eight, four, and 5.25 percent, respectively, for the month of May. Most economists believe all interest rates will remain unchanged this summer, even if inflation continues to decline, as is anticipated.

It is hard to imagine that any other country within the euro zone has been as negatively impacted by 2008’s global recession as Spain. Not only is the nation currently enduring its second recession in four years, but its business confidence and employment levels have deteriorated to near-record lows. Since the second quarter of 2007, Spain’s unemployment rate has risen exponentially, climbing from eight to 24.4 percent this past quarter. The nation’s first quarter 2012 jobless rate, which was more than twice as high as the euro zone’s, is the highest that has been recorded since 1994. And, more than 5.6 million Spaniards are presently without work, the highest figures that have been verified in nearly 40 years.

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