Economic sentiment and business climate stagnate in miserable euro area

Family picture after the 3rd meeting of the High Level Expert Group on Key Enabling Technologies, with the participation of Antonio Tajani, Vice-President of the EC, and Johannes Hahn, Member of the European Commission. (EC Audiovisual services, 29/01/2014).

Family picture after the 3rd meeting of the High Level Expert Group on Key Enabling Technologies, with the participation of Antonio Tajani, Vice-President of the European Commission, and Johannes Hahn, Member of the European Commission. (EC Audiovisual services, 29/01/2014).

Tantalizingly slow proves the tempo of Eurozone’s economic resumption, if such a thing exists at all. According to the European Commission Directorate General for Economic and Financial Affairs (ECFIN), “in January the Economic Sentiment Indicator (ESI) increased by 0.5 points in the euro area (to 100.91) and by 0.9 points in the EU (to 104.7)”. However, the problem is that this indicator keeps rising since last May, without any visible positive effect on employment and GDP growth. What is even more disconcerting relates to the Commission’s admission that “the magnitude and sectoral scope of the improvement in confidence has moderated somewhat”.

While any indication from Eurostat, the EU’s statistical service, about the evolution of the GDP during the fourth quarter of 2013 is still pending, the confirmation that growth receded to 0.1% in the third quarter from 0.3% in the second, is still haunting the development analysis. Those results refer to quarter to quarter statistics. When passing to yearly comparisons the picture becomes more discouraging. Compared to the same quarter of the previous year, seasonally adjusted GDP fell by 0.4% in the euro area after falling by 0.6% in the previous quarter.

Only services

In detail, “In the euro area, the ESI’s increase was driven by improved confidence in services, retail trade and among consumers. By contrast, confidence weakened in industry and construction. Economic sentiment improved in two out of the five largest euro area economies, i.e. Germany (+0.7) and France (+1.1), remained broadly stable in Spain and Italy and deteriorated in the Netherlands (-1.0)”. It is obvious that economic sentiment improvement is geared by betterment in the non-manufacturing part of the economy. This observation confirms that industry keeps losing grounds.

Unfortunately, the retreat of Eurozone’s manufacturing sector is an old story. In view of that, the European Commission on 22 January presented an initiative for a “European Industrial Renaissance”. The aim is obviously to support the manufacturing, which is considered as the heart of every developed economy. Of course, the results of such an action are not expected to have an immediate positive effect on industry. It becomes apparent that over the next few months manufacturing is not expected to contribute positively to overall economic growth in Eurozone.

Industrial retreat

This is confirmed by the Press release issued today by the Commission on economic sentiment results which admits that “Industry confidence registered a small decrease (-0.5), resulting from managers’ worsened assessment of the stocks of finished products. Their production expectations and assessment of the current level of overall order books were virtually unchanged”.

Let’s see then where from any GDP growth could materialise. The same Press release states that, “The strong increase in services confidence (+1.9) resulted from improved assessments of demand expectations and the past business situation… Consumer confidence improved markedly (+1.8) and is above its long term-average for the first time since July 2011…Albeit to a lesser degree, also consumers’ views on the future financial situation of their households improved… Retail trade confidence increased markedly (+1.6)… Meanwhile, confidence in the construction sector decreased strongly (‑3.7) … Financial services confidence (not included in the ESI) increased by 4.1 points…”

In short, industry and construction, the two powerhouses of every economy, keep receding while any positive developments are expected from services and retail sales. There is nothing wrong with betterment in services, retail trade and consumer confidence. However this is not quite the kind of economic growth expected from a highly sophisticated and advanced economy like Eurozone.

Negative signs in climate

Regrettably, more negative news keeps coming from the business climate indicator. Again the Commission observes that “In January 2014 the Business Climate Indicator (BCI) for the euro area remained virtually unchanged at +0.19”. There is more in it though. The next sentence of the announcement states that “The level of the stocks of finished products was assessed more negatively”.

In short there is nothing alarmingly negative, but also no positive prospects could be detected in today’s announcement by the Commission’s Directorate General for Economic and Financial Affairs. Economic sentiment and business climate in Eurozone keep stagnating as it does the entire euro area miserable club.

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

Stopping antimicrobial resistance would cost just USD 2 per person a year

Charlie’s tragedy energized deeper feelings amongst Europeans; back to basics?

Changing for the change: Medicine in Industry 4.0

The unique role of business in building social good

UN forum spotlights cities, where struggle for sustainability ‘will be won or lost’

Why is Merkel’s Germany so liberal with the refugees? Did the last elections change that?

Apparently the EU Digital Single Market passes necessarily from China’s Digital Silk Road

Further reforms will promote a more inclusive and resilient Indonesian economy

More bank bailouts at taxpayers’ expenses

Paris is building the world’s greenest business district. What can other cities learn from it?

Financial Transaction Tax: More money for future bank bailouts?

FROM THE FIELD: Finding refuge in the ‘beautiful game’

India is a latecomer to AI. Here’s how it plans to catch up

An FTA between EU-US to hurt South Korea

A European Discovers China: 3 First Impressions

Sudzha gas metering station at Russian-Ukrainian border (Copyright: Gazprom, 2015 / Gazprom’s website, Media)

Gazprom starts suspending gas contracts with Ukraine as Brussels fears limited transit to Europe

EU Leaders’ meeting in Sofia: Completing a trusted Digital Single Market for the benefit of all

The banks first to benefit from the new euro trillion ECB plans to print

EU Youth Conference in Riga concludes with recommendations for ministers

Deal on faster exchange of non-EU nationals’ criminal records

Poverty data never tells the whole story

UN expert ‘shocked’ by Egyptian reprisals against human rights defenders she met

Open, inclusive and diverse cities are better for business and economic growth

ILO warns of widespread insecurity in the global labour market

Conflicts and extreme climate change threatens access to food in 39 countries – UN agriculture report

At last a good price for the Greek debt!

New skills agenda for Europe needs real investment

COP21 Breaking News_03 December: Transport Industry Drive for Improved Energy Efficiency and Electro-Mobility to Stem High Growth of Emissions

Amending Guatemala ‘reconciliation law’ would lead to unjust amnesty, warns Bachelet

Climate change and its adverse impacts on health

Ercom, cutting-edge Telco solutions from Europe

European Confederation of Junior Enterprises hosts in Geneva the Junior Enterprise World Conference

African cities will double in population by 2050. Here are 4 ways to make sure they thrive

Consumers suffer three defeats

The Junior Enterprise concept: Business & Education

Trump rejects Europe’s offer for zero car tariffs; he had personally tabled that idea in July

The time is up but the game is still not over for Greece: negotiations continue in anticipation of a new deal

UN chief condemns killing of ‘blue helmets’ in DR Congo, as violence erupts prior to elections

Guatemala Dos Erres massacre conviction welcomed by UN human rights office

Four major resources for new European young entrepreneurs

Capital Markets Union: Making it easier for smaller businesses to get financing through capital markets

Financiers can turn the world into a dirty and dangerous place

Parliament approves €500 million for schooling of refugee children in Turkey

Businesses can lead a revolution in disability inclusion

Stricter rules and tougher sanctions for market manipulation and financial fraud

EU readies for eventual annulment of the Turkish agreement on immigrants-refugees

YouTube stars get creative at UN, to promote tolerance

International World Summit Award calls for outstanding digital applications with impact on society from 178 UN member states

The Future of Balkans: Embracing Education

European Business Summit 2014: The role of youth entrepreneurship education in EU’s Strategy for Competitiveness

UN chief condemns student abductions in north-west Cameroon

Autonomous vehicles could clog city centres: a lesson from Boston

EU responds to terror fallout by eroding borderless Europe and molesting the refugees

Germany and Europe prepare for Trump’s America

In Washington D.C., Guterres signs pact with World Bank, meets US President Trump

A new proposal breaks the stalemate over the Banking Union

‘Favour dialogue’ over violence, UN chief urges all parties following clashes in Mali’s capital

India’s economy is growing fast, but its poorest areas lag behind. Here’s why this could be about to change

These countries have the highest minimum wages

EU summit: Are the London Tories planning an exit from the EU?

UN rights chief calls for international inquiry into Kashmir violations

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s