It has been some time since I have posted thoughts on economic data: sometimes it is better to stand and watch the water pass under the bridge and just realise that water always passes under the bridge.
It is no surprise that conditions remain weak in Europe, but the unfolding story is the slow motion collapse of Greece, the increasingly perilous state of Spain and Portugal and the increasing risks in Italy. European Central Bank monetary intervention (the LTROs) appears for now to have halted an immediate collapse in the Eurozone, but with weak economic conditions, sovereign debt and financial system risks are likely to get worse. Europe needs growth, but the world is set for a long period of low to negligible growth as it continues to rebalance debt and demand/production/investment dynamics.
Some recent data:
The Eurozone manufacturing PMI held steady at 49 in February: there was significant weakness and deterioration in Greece (record low), as well as Spain (2 month low); new orders (PMI) fell for the ninth month running and new export orders for the 8th month running.
Recent unemployment data shows 10.7% unemployment in the Euro 17 area, which is a sizeable increase from 10% in January 2011. It is worthwhile noting that unemployment rates only include those who have sought work in the last 4 week period.
Euro area GDPfell by 0.3% (1.2% annualized) in the fourth quarter, and up by a meagre 0.7% over the year.
Monetary financial data remains weak– while seasonally adjusted MS data shows increases in January, loan data shows loan growth to non financial corporations falling to an annual 0.7% and to households rising to 2.1% form 1.9% (total loans to households fell in January by 0.124%).
In the UK M4 lending was up 0.1% month on month and M4 itself up 1.6%. Year on year M4 lending was still down 3%. Despite some recently positive data from the UK the ultimate demand backdrop given its own debt problems and proximity to the Euro zone is not good.
French January household goodsconsumption fell 0.4% (vol) after 0.2% December decline.
German retail sales were weak and down 1.6% on the month.
“According to provisional results of the Federal Statistical Office (Destatis), retail turnover in January 2012 in Germany increased 3.5% in nominal terms and 1.6% in real terms compared with the corresponding month of the previous year. The number of days open for sale was 26 in January 2012 and 25 in January 2011. When adjusted for calendar and seasonal variations (CENSUS X-12-ARIMA), the January turnover was in nominal terms 1.0% and in real terms 1.6% smaller than that in December 2011.