Europe is coming back? The European economic picture is actually quite grim for its average working citizen

Here’s The State Of The World Economy – JOE WEISENTHAL

Today is the perfect day to step back and take a big picture look at the world economy.


For one thing, it’s Labor Day in the US, so it’s a natural time to gain perspective. It’s also, fortuitously, PMI Day in the rest of the world, so we have a lot of fresh economic data.

So let’s hit on the big themes.

1) Europe is coming back.

We’ve been writing about this since early in the summer, but the latest data makes it clear that across the Eurozone, a comeback is happening.

Both Spanish and Italian PMIs had their best months since Spring 2011. Germany remains solid. And even Greece (!) is surging back. It’s nearly back to growth.

This table from Markit nicely tells the whole story in the Eurozone.



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If only we could get Joe to give us “the rest of the story”. The European economic picture is actually quite grim for its average working citizen, who finds himself/herself working less and less and making less and less money:

“First Spain:

“The news from the Spanish manufacturing sector improved again in August, with PMI data highlighting a first rise in output for 28 months. As has been the case in recent months, exports were the key source of positive momentum as growth quickened sharply. Firms appear still to doubt the sustainability of the current improvements, however, opting to raise output only modestly and often using existing stocks to meet new order requirements.”

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There was evidence that in some cases firms used existing inventories to cover new orders rather than increasing production. The delivery of orders was mentioned by panellists that saw falls in backlogs of work and stocks of finished goods. Post-production inventories decreased at the fastest pace since March.

Manufacturers also continued to lower employment, despite rising demand. Firms partly linked the latest fall to attempts to improve efficiency. The rate of job cuts quickened to the sharpest in four months.

Or how about Italy:

Despite recording sustained growth in output over the past three months, manufacturers maintained a preference for lower staffing numbers. The rate of job shedding in August was slightly faster than one month earlier….

“Growth was once again achieved without firms having to raise staffing levels, with August’s decrease in employment the twenty-fifth in a row. Firms reported being able to keep on top of higher order requirements, and further reduced their backlogs of work.
And finally for the Eurozone as a whole:

Employment remained a weak point for the manufacturing sector in August, with job losses recorded for the nineteenth straight month. The pace of reduction was slightly faster than in July – mainly due to steeper rates of decline in Germany, Italy and Spain – but still weaker than the average for the current sequence of job shedding. Only Ireland reported an increase in staffing levels.

…”the fact that companies remain reluctant to take on staff [due to the need to cut costs to boost competitiveness and offset rising oil prices] suggests that there’s a long way to go before the recovery feeds through to a meaningful job market improvement.”

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