15/4/2013: Advanced economies exports: converging in growth trends?

Quite an interesting new trend that emerged since the late 2000s and is reaching well into 2012-2013 so far is the trend of convergence in the rates of growth in exports of goods and services between euro area, the US and Japan.

Here are few charts:

 Note, the above correlations convergence is also confirmed on a 20 year rolling basis.

One thing is pretty clear from the above: while prior to 2004-2005 the US exports dynamics remained relatively weak compared to those of the euro area, since 2005, the picture has changed dramatically, with the US exports dynamics falling pretty much in line with those of the euro area.

Here are some interesting facts:

• On a cumulated basis, from 1981-2012, volume of exports has expanded from index reading of 100 in 1981 to 406 in 2012 for Japan, 352 for the UK, 505 for the US, 812 for the Advanced Economies and 715 in the euro area, highlighting the fact that the euro area overall cumulatively outperformed all other economies in the comparison group.
• Similarly, on cumulated basis, from 2000 (index=100) through 2012, volume of exports index rose to 156 in the case of Japan, 137 in the case of the UK, 156 in the case of the US, 227 in the case of the Advanced Economies and 237 in the case of the euro area, once again confirming euro area outperformance over the period.
• In contrast, on cumulated basis, from 2004 (index=100) through 2012, volume of exports index rose to 124.5 in the case of Japan, 122.1 in the case of the UK, 151.6 in the case of the US, 166.4 in the case of the Advanced Economies and 154.8 in the case of the euro area, showing closing gap in euro area outperformance compared to the US over the period.

The drivers for these changes are most likely a combination of factors including:

• Technological and supply chains convergence in traditional sectors;
• Increased openness in the euro area to trade;
• Changes in currency valuations with the introduction of the euro and the effects of the current crisis on currency valuations;
• Improving energy component of the total cost basis in the US, and
• Shift in exports growth toward services sectors (composition effects).

14/05/2011: Euro area growth leading indicator

An excellent blog post from the Zero hedge on the ECB's absolutely outrageous treatment of public disclosure rules when it comes to the Greek's Enronesque accounting fraud: here. Absolutely worth a read.

Now, on to the post. Eurocoin - leading indicator of economic activity for the Euro area - needs to be updated to reflect couple of months of my absence from the blog. So here it is:

After couple of months of static activity, the Euro-coin is back on the rise in Q2 2011. This increase in the leading indicator, however, is driven primarily by external trade. Blistering exports performance is in turn driving expansions of manufacturing (industrial output) in Germany, France and now Spain, while Italy's industrial output remains largely stagnant.

Consumers are striking across the Euro area with retail sales for March coming in at -1.0% (-0.8% in EU27) month-on-month. This reverses 0.3% rise in retail sales volumes for Euro area recorded in February (+0.1% for EU27). Year-on-year retail sales fell 1.7% in March 2011 for the Euro area and 1.0% for EU27. Although EU economy has never been explicitly focused on the objective of internal markets improvements for the sake of consumer, these figures suggest that 'exports-only-led' recovery is coming in at the expense of the already weakened European households.

Here are two charts on the latest retail sales indices:
Industrial production latest data, released after euro-coin data, shows some pressures on the manufacturing sector: March 2011 seasonally adjusted industrial production1 fell by 0.2% in the euro area and by 0.3% in the EU27 month-on-month. This follows an increase of 0.6% and 0.4% respectively in February 2011. Year-on-year March industrial production expanded by 5.3% in the euro area and by 4.6% in the EU27.

Economics 28/12/2009: Euro area forecast for growth

New Eurocoin is out and signaling improvement of the Euro area economy, albeit at a slowing rate. Inputs first:
Industrial production is tapering off through November - despite some seasonal pressure to rebuild stocks pre-sales season. Ditto for PMIs:
France and Spain continue to worry in the above due to clearly weakening domestic demand, while Italy and Germany are showing signs of advanced orders falling slightly off - future exports might be challenged.

Consumer weaknesses are highlighted below:
Loud and clear!

So forecast is for moderation in Eurocoin rise and thus a slowdown in the increase in growth into Q2 2010. Will Q1 2010 be the strongest bounce of 2010?
Forecast still to the upside in Q1 and Q2 2010, but this depends on Q4 2009 results, which