EU Manufacturing Declines

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And significantly. It will be worth looking at the US data this afternoon, but the trend is clear, off-shoring is, if anything, picking up speed.

Manufacturing in the dozen euro nations in May shrank the most in almost two years as unemployment near a five-year high and oil prices around $50 a barrel add to concerns about the outlook for expansion this year.

An index based on a survey of about 3,000 purchasing managers compiled by NTC Research Ltd. for Reuters Group Plc fell to 48.7, the lowest since July 2003, from 49.2 in April, according to figures available on the Internet today. Economists had expected a reading of 49.2, according to the median of 30 estimates in a Bloomberg survey.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

2 thoughts on “EU Manufacturing Declines”

  1. “Manufacturing in the dozen euro nations in May shrank the most in almost two years”

    Unfortunately, the alarming opening sentence is not really detailed in the article by data or links.

    The rest is a rather haphazard collection of quotes and numbers with little coherent analysis.

    For example:
    How do the movements of oil prices and the Euro exchange rate relate to each other ?

    Another example:
    “The reluctance of households to spend makes it difficult for companies …. Berthold Hermle AG, a German maker of drilling machines, said on May 24 it would be struggle to reach its 2005 targets”

    Hermle produces machine tools. Linking their problems to private household shopping is a rather long stretch, especially since they do more than a third of their sales abroad:
    http://www.hermle.de/fs_hermle.php?sprache=en&page=147

    I am not an economist, but the Gloomberg article is not a brilliant piece of analysis, IMHO.

  2. “Unfortunately, the alarming opening sentence is not really detailed in the article by data or links.”

    No you are right, this is typical of Bloomberg, and they pay a lot of money to the people who write this.

    “Hermle produces machine tools.”

    You are right, citing a drilling machines company for household spending is hilarious :).

    Glad to see you taking so much intererest. Please keep picking me up.

    btw the falling euro and oil. They work in opposite directions. Costs of oil will rise, the falling euro will boost exports. It is an empirical question in each and every case whcih effect is bigger. This will vary from one EU economy to another. (Another problem for having the same currency, incidentally).

    The core link for all this is here:

    http://www.ntc-research.com/Information/EuroZoneMethodology.asp#DATARELEASE

    Enjoy yourself :).

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