Friday, March 1, 2013

No, Mr. Draghi, Europe is Not Healing

Here's the latest unemployment chart from Eurostat:

You'll notice a month to month increase of .1%, indicating that unemployment is getting worse, not better.  As unemployment is a coincident economic indicator, this is pretty good evidence that the EU's overall condition is worsening.

But the news actually gets worse from there:

The euro area1 (EA17) seasonally-adjusted2 unemployment rate3 was 11.9% in January 2013, up from 11.8% in December 20124. The EU271 unemployment rate was 10.8%, up from 10.7% in the previous month4. In both zones, rates have risen markedly compared with January 2012, when they were 10.8% and 10.1% respectively. These figures are published by Eurostat, the statistical office of the European Union.
Compared with a year ago, the unemployment rate increased in nineteen Member States, fell in seven and remained stable in Denmark. The largest decreases were observed in Estonia (11.1% to 9.9% between December 2011 and December 2012), Latvia (15.5% to 14.4% between the fourth quarters of 2011 and 2012), Romania (7.4% to 6.6%) and the United Kingdom (8.3% to 7.7% between November 2011 and November 2012). The highest increases were registered in Greece (20.8% to 27.0% between November 2011 and November 2012), Cyprus (9.9% to 14.7%), Portugal (14 7% to 17.6%) and Spain (23.6% to 26.2%).

So -- compared with a year ago, unemployment has increased 1%.  And on a year over year basis most countries -- as in 70% -- saw an increase while only 25% (7 countries total) saw a decrease.  That's an unmitigated economic policy disaster.

And then there are the latest round of Markit manufacturing surveys.  Here's the short version:

Germany is doing well.
France is deteriorating sharply with a reading of 42.9
Italy's rate of deterioration is accelerating; their latest reading is 45.8
Spain's rate of deterioration is improving, but they still have a reading of 46.8.

I understand that Central bankers jobs have an inherent PR component.  And, a central bank head who was alarmist in his public statements would do more harm then good.  However, the continued talk of a 2H13 turnaround is looking more and more like a pipe dream and the EU slogs its way through continued economic contraction.