12/11/2013: OECD Leading Indicators: September 2013

The poverty of non-recovery recovery...

OECD Leading indicators numbers are out and we have... 100.7 current (barely any growth) against 100.6 prior (barely any growth)... In other words, things are going nowhere fast:

• Japan beats OECD trend at 101.1 but a weak expansion on prior 101.0
• Euro area 100.7 same as OECD average, on 100.6 prior (weak expansion) and ditto for Germany which is now under-performing regional at 100.5 up on 100.4 prior. France - the 'laggard' before - is still a drag: 100.1 current on 99.8 prior.
• US 100.8 against 100.9 prior (so slower, but still slightly ahead of OECD average)
• UK 101.3 (ahead of OECD average) compared to 101.1 prior
• In contrast, two BRICs: China 99.4 on 99.2 prior - anaemic, and India 96.7 on 96.9 prior - weak.

So all in - tough conditions remain, but at least OECD is above 100...

Euro area set:

Economics 30/10/10: Euro area growth forecast

Updating leading indicator data for Euro area growth from Eurocoin:
Having posted bang on forecast for September (forecast was 0.34 and this is what the final number came in at), I missed October turning point. The latest uplift suggests growth of 0.9% in Q3, but I am not convinced for a number of reasons:

• Growth in the lead indicator is driven strongly by the EU Comm survey of business expectations which has been trending strongly up since Feb 2010. In the mean time, PMIs-based expectations metric is showing a renewed expectation for a slowdown.
• Consumer confidence surveys are flat.
• Exports (to August) are down

So I am still sticking to Q3/Q4 growth at 0.2-0.25%

Economcis 27/06/2010: US retail sector - lessons for Ireland?

A very interesting perspective on the consumer side of the US economy in a recent post on Seeking Alpha (here):

"Let’s compare and contrast 2007 and 2010:

• We have lost 7.8 million jobs since then.
• The unemployment rate is 9.7% versus 4.5%.
• Total unemployed workers are now 15.7 million versus 6.5 million.
• Real personal income less government transfers is lower by 6.5%, or $624 billion.
• Real retail sales have rebounded just 4% from their lows and are still down 9% from the 2007 peak.
• Consumer credit for February showed another sharp retrenchment of -5.6B.
• Consumer bankruptcies for March were the highest level since 2005.
• There is a glaring $1.5 TRILLION hole in the consumer balance sheet.
• Home foreclosures surged 19% last month and are at their highest level since 2005.
• The consumer’s largest asset (housing) is down 33% since 2007."

And a chart:
The index closed down at 89.49 this Friday.

This has three implications for Ireland:

1. US problems on consumer side pale in comparison with those found here. We had much deeper contractions in housing asset prices, much greater exposure to housing in the overall composition of household assets portfolios, much more severe acceleration in unemployment, much deeper collapse in disposable after-tax incomes (courtesy of twin forces: Government tax policies and indirect tax hikes, plus wages compressions), lack of compensating increases in Government transfers, more restrictive personal bankruptcy laws, greater consumer leveraging, and steeper fall-off in credit availability;
2. As I wrote before (here), household investment is the core leading indicator of recoveries and recessions; and
3. Our cohort of official commentariate on matter economic has been very eager to drum up the stories about 'return of consumer spending' in recent weeks.

To remind you - here are our latest retail sales stats:
In my view, what we are seeing is a temporary uplift in sales of some items that are overdue replacement (due to amortization) after 3 years of collapsed sales. This, folks, is not a recovery. It is a dead-cat-bounce... When you hit concrete at 100mphs, the bounce can be substantial. But it hardly qualifies as a 'structural improvement'. Looks like some folks might be deluding themselves...