Investor sentiment in Germany - as recorded in the ZEW index fell for the ninth straight month in October, dipping to its lowest level in over 13 years. I have really nothging more to say at this stage, this was all soooo predictable. For a good example of someone who saw it coming try Claus Vistesen (and here , and here).
Well, here we go:
The Mannheim-based economic think tank said its economic expectations indicator for Germany, based on a survey of 298 analysts and institutional investors, fell to -27.4 from -22.2 in September.
That was lower than the -20 reading expected by economists in a Reuters poll and the weakest level since March 1993. The euro slipped briefly against the U.S. dollar in response to the figures.
ZEW President Wolfgang Franz said rising orders and lower oil prices should have helped the indicator in October.
“Economic expectations were, however, overshadowed by a possible cooling of the U.S. economy, by a likely further rise in ECB interest rates and above all by the decreased consumer buying power through the VAT increase and other tax measures n 2007,” Franz noted.
The poor sentiment reading came amid growing optimism about 2006 growth in Europe’s largest economy.
Tuesday, October 17, 2006
Monday, October 16, 2006
Productivity In Europe
As was to be expected the rate of productivity increase in the US now seems to be slowing somewhat. Maintaining the rate of increase means maintaning the pace of a technological and organisational revolution, and it isn't immediately obvious that this is always possible (hence all those arguments about whether the cruising speed of the US economy had been raised in the long term or not).
On the other hand Europe is now catching up somewhat in the productivity game:
``Labor productivity, the holy grail of economic welfare and stock-market performance, has significantly accelerated,'' says Eric Chaney, Morgan Stanley's chief European economist in London and a former forecaster at the French Ministry of Finance.
Morgan Stanley economists calculate that productivity increased in the dozen euro nations at an annual rate of 2.6 percent in the first half of 2006, double the pace of the prior six years.
So while tyhere is obviously a first mover advantage with new technology, there is also a second mover 'catch-up' advantage if the pioneer doesn't keep moving forward. This is what we may now be seeing. Over a longer period of time there is absolutely no reason whatsoever that the EU economies cannot find ways to leverage ICT just like in the US, who have, at the end of the day, shown the others the way.
What the macro economic implications of this will be is another matter altogether. Here I don't go with the Bloomberg reading at all, but this is for another post.
On the other hand Europe is now catching up somewhat in the productivity game:
``Labor productivity, the holy grail of economic welfare and stock-market performance, has significantly accelerated,'' says Eric Chaney, Morgan Stanley's chief European economist in London and a former forecaster at the French Ministry of Finance.
Morgan Stanley economists calculate that productivity increased in the dozen euro nations at an annual rate of 2.6 percent in the first half of 2006, double the pace of the prior six years.
So while tyhere is obviously a first mover advantage with new technology, there is also a second mover 'catch-up' advantage if the pioneer doesn't keep moving forward. This is what we may now be seeing. Over a longer period of time there is absolutely no reason whatsoever that the EU economies cannot find ways to leverage ICT just like in the US, who have, at the end of the day, shown the others the way.
What the macro economic implications of this will be is another matter altogether. Here I don't go with the Bloomberg reading at all, but this is for another post.
Wednesday, October 04, 2006
Eurozone: One More Indicator To Add To The List
The Royal Bank of Scotland services index fell yesterday to 56.7, a 10-month low, from 57.4 in August. As Bloomberg wryly note, this is the biggest part of the economy. In that sense people may have been far too focused on industry and construction.
Growth in European service industries such as telecommunications and banking, the biggest part of the economy, slowed more than forecast in September after borrowing costs and unemployment climbed.
With interest rates increasing, a planned tax rise in Germany and a U.S. slowdown clouding the outlook, the International Monetary Fund expects euro-area growth to slow to 2 percent next year from 2.4 percent in 2006. Unemployment in the dozen countries sharing the euro rose in August for the first time in almost three years, a report showed yesterday.
One more little finicky detail, oil is falling, but if the economies didn't slow *that* much as it rose, then that does provide some sort of context for thinking about how much benefit we will see as it falls. My feeling is that many people seem to be challenged when they have to think about more than one thing at a time. Oil fell yesterday, and stocks rose. But if oil fell because growth was looking weaker for 2007, why should this be good news for stocks? I would be watching what happens next in the equity markets.
Growth in European service industries such as telecommunications and banking, the biggest part of the economy, slowed more than forecast in September after borrowing costs and unemployment climbed.
With interest rates increasing, a planned tax rise in Germany and a U.S. slowdown clouding the outlook, the International Monetary Fund expects euro-area growth to slow to 2 percent next year from 2.4 percent in 2006. Unemployment in the dozen countries sharing the euro rose in August for the first time in almost three years, a report showed yesterday.
One more little finicky detail, oil is falling, but if the economies didn't slow *that* much as it rose, then that does provide some sort of context for thinking about how much benefit we will see as it falls. My feeling is that many people seem to be challenged when they have to think about more than one thing at a time. Oil fell yesterday, and stocks rose. But if oil fell because growth was looking weaker for 2007, why should this be good news for stocks? I would be watching what happens next in the equity markets.
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