Wednesday, November 23, 2011

European Industrial Orders Cliff Dive in Sep

Eurostat just released figures for industrial new orders for September.  The summary graph is above both for the Eurozone specifically (pink) and the whole EU (black).
In September 2011 compared with August 2011, the euro area (EA17) industrial new orders index fell by 6.4%. In August the index rose by 1.4%. In the EU27 new orders decreased by 2.3% in September 2011, after a fall of 0.3% in August. Excluding ships, railway & aerospace equipment, for which changes tend to be more volatile, industrial new orders dropped by 4.3% in the euro area and by 2.1% in the EU27.
Clearly the September number is a very weak reading and suggests that Europe may now be entering a sharp contraction in the real economy.

There have been indicators suggesting mild contraction for a while - eg retail trade.  But this is the first indicator I've seen that looks like the kind of sharp non-linear contraction characteristic of an out-and-out recession.  I guess there's always the possibility that October will be better.  However, given the financial news flow in the last six weeks, it's hard to imagine too many European executives getting all giddy and excited in approving new projects.

Looking at the country-level internals is, if anything, even more indicative:

Germany, France, Italy, and Spain: the four biggest economies in the Eurozone all experienced big drops in industrial new orders.

1 comment:

Anonymous said...

China HSBC manufacturing flash PMI output sub-index for November indicates severe contraction, falling from Oct reading 51.4 to 46.7.