EU: All economic indicators in free fall

It’s a real disappointment to follow the business climate indicator (BCI) table during the last months. As from April 2012 this index is stuck in a continuous downward course and not once in the thirteen month period, from April 2012 to April 2013, this indicator didn’t record a positive price. The continuous line of the thirteen negative quotes, up to  April 2013, at -0.93 down by -0.18 from -0.75 in March, it’s a really discouraging picture. Invariably the reason for this continuous decline as reported by the European Commission is that, “While the assessment of the stocks of finished products remained broadly stable, all other components deteriorated (current order books (overall and export), past production, production expectations). The assessments of past production and overall current order books witnessed particularly sharp declines”. Unfortunately there is more bad news from the European economic front. Also in April 2013, the Economic Sentiment Indicator (ESI) declined markedly in both the euro area and the EU. According to the relevant press release, “In the euro area, the ESI’s decline was broad-based across all business sectors, with services witnessing the sharpest drop, while consumer confidence went up. Among the five largest euro area economies, economic sentiment worsened significantly in Germany (-2.3), France (-2.0) and Italy (-1.9), while remaining broadly stable in the Netherlands (+0.2) and improving in Spain (+0.9)”. Alas there is no end to negative statistics. In the fourth quarter of 2012, the business investment rate was 19.7% in the euro area, compared with 20.0% in the third quarter of 2012. This fall was the result of investment decreasing (-1.7%) at a higher pace than gross value added (-0.4%). Total stocks (materials, supplies and finished goods) fell for the fifth quarter in a row. In the EU27 the investment rate was 19.6% in the fourth quarter compared with 19.7% in the previous quarter”. These data come from a detailed set of seasonally adjusted quarterly European sector accounts and were released by Eurostat, the statistical office of the European Union, and the European Central Bank (ECB). Economic sentiment Coming back to the most important indicator, the one about economic sentiment, there is more details. According to the relevant announcement, “The decrease in industry confidence (-1.5) resulted from a much more negative assessment of the current level of overall order books and lower production expectations. Managers’ assessment of stocks of finished products remained virtually unchanged. The past production and, to a lesser extent, the current level of export order books, which are not included in the confidence indicator, were also assessed more negatively. Services confidence dropped abruptly by 4.1 percentage points, driven by significantly worsened assessments of the business situation and demand over the past three months. Demand expectations deteriorated to a lesser extent”. In short the two most important sectors of economic activities, namely industry and services are in a bad shape. In general the entire business universe of Eurozone and the EU in its entirety is in difficulty. This time Germany has not escaped from the overall negative picture. This is the country where the economic sentiment recorded its most abrupt fall in April 2013.