Monday, October 15, 2012

The EU Slowdown in (Ugly) Pictures

The EU is in the middle of a slowdown.  The latest monthly statistical release from the ECB places that slowdown in context.

The above chart shows how various parts of GDP have contributed to the net change in GDP over the last few quarters.  First, for the last five quarters, there has been a complete absence of domestic demand from the picture.  Inventories as well are subtracting from growth.  In fact, the only net positive is exports.  That's not good.  As the report notes:

The above chart of retail sales shows that this part of the economy is in trouble as well.  It has been dropping since its post-recession peak and has been negative for the better part of a year.  Also note the declining consumer and retail confidence.

Finally, there is the industrial sector, which is contracting as well.  Also note the very negative reading on industrial confidence,  although PMI has rebounded somewhat (from low levels).