10/10/11: The Gathering

According to the latest CSO data, 6,037,100 foreign visitors came to Ireland in 2010 and in January-July 2011, there were 3,696,000 overseas visitors to Ireland. Of the above, in the same two periods, 935,500 visitors (2010) and 594,700 visitors (January-July 2011) from overseas to Ireland came from North America a rise of 13% on January-July figures for 2010.

In 2009 (the latest for which data is available via CSO), visitors from North America spent €620mln excluding international airfares during their trips to Ireland. The number of visitors in the same period from North America amounted to 980,000, implying per-person per visit spend of €632.65.

Given that since 2009 continued deflation in domestic economy has reduced the costs of travel to Ireland, suppose the number above applies in today's terms. Let us, therefore, assume that per-visit per-person spend for North American visitor to Ireland is somewhere around €650.00.

"Global Irish Forum" promised to increase these numbers by 325,000 additional visitors in 2013 or ca €211.25mln for the year 2013.

This means that the GIF promises to yield a whooping:

• 5.38% increase in the total number of visitors on 2010;
• 5.13% increase in the total number of visitors on projected number of visitors in 2011;
• 34.74% increase in the total number of visitors from North America in 2010;
• 31.88% increase in the total number of visitors from North America projected for 2011 based on January-July data
• 5.45% increase in the total spending by visitors to Ireland on 2009 annual levels

Over the period during which GFI guests wined and dined in Dublin contemplating this dramatic economic stimulus, Irish state moved 3 days closer to repaying €737mln of yet another Anglo unsecured, un-guaranteed bonds to largely foreign investors. The cost of these bonds will be equivalent to repeating the achievements of The Gathering for 3 years, 5 months 26 days 9 hours and 36 minutes, not accounting for costs and inflation.

In the end of the GIF the delegates also agreed another substantial measure for boosting the Irish economy and improving Irish society - the Diaspora Awards, which will be carried out at the expense of the Irish taxpayers and will comprise annual gathering of the best and the brightest minds who have concocted the idea of The Gathering.

07/11/2011: Is Ireland a Poster-Boy for "Austerity & Growth" paradigm?

My article on the real dynamics in Irish economic 'recovery' and 'austerity miracle' is available on LISWire: http://liswires.com/archives/1359. 

07/10/2011: Tax returns - truth and DofF-ised surreality

In his statement, following the publication of Exchequer returns for September (here), Minister for Finance, Michael Noonan stated (emphasis mine): "Tax receipts in the period to end-September were 8.7% above the same period in 2010 and slightly ahead of expectations. Although the minor surplus is due to some favourable timing factors and receipts from the Pension Levy introduced to fund the Jobs Initiative, it is encouraging that overall tax revenue is growing again. Individual tax-head performance has been mixed. VAT receipts are weaker than expected but income tax is performing well." The Minister further positioned improved tax and fiscal performance within the context of Irelands 'return to economic growth'.


Note: there is an excellent post on this topic available from Economic Incentives blog (here), although our numbers do differ slightly due to my numbers resting on explicit model for Health Levy revenues and some rounding differences. In addition, my post focuses on comparatives, including to pre-crisis dynamics and returns. I also attempt to cover slightly different questions as outlined below. Furthermore, Economic Incentives blog post also covers the issue of distorted timing on DIRT payments in April and July that I omit in the following consideration.


Another note: over the last 4 years we became accustomed to brutish spin from the previous Government when it comes to painting the tape on Ireland's 'progress' and 'recovery'. The current Government, however, is much more subtle in presenting the positive side of the 'recovery' and Minister Noonan's statement quoted above shows this. However, the real issue here is that in the name of transparency, DofF should be reporting actual figures that are comparable year on year. It's their job and they are failing to deliver on it.


The above statement, of course, raises the following three questions:

1. Did Ireland's tax revenue performance for 9mo through September deliver a significant enough change on 2010 and/or pre-crisis performance to warrant the above optimism?
2. Is Ireland's tax revenue performance attributable to 'return of growth'? and
3. Are the overall tax revenues really 'growing again' in any appreciable terms worthy of the Ministerial claim?

Table below summarizes the data on tax revenues through September 2011, including adjustments to tax heads that reflect:

• USC charge conversion from Health Levy to Income Tax measure: prior to 2011, health levy was collected within PRSI contributions, without being classified as Income Tax. In 2010, the levy collected amounted to €2.02bn for the year as a whole. Using distribution of income tax revenues across months for 2008-2010 average, I estimate that 65.9% of Health Levy would have been collected through September 2011 and account for this in the Income Tax ex-USC line. This is an imperfect estimate that errs on the downside of the overall USC impact as it disregards changes to the Health Levy rates & bands applied. In other words, my estimate assumes that USC incorporated into Income Tax today carries within it unchanged revenues from the Health Levy as per 2010.
• Pensions levy of €457mln is aggregated in the official figures into Stamp Duty returns and the table below provides for this in the line on Stamps ex Pensions levy. Note that the target for Pensions levy receipts was set at €470mln, so there is a shortfall on the target of €13mln which I do not account for in the relevant figures, making my ex-levy estimates erring on cautious side.
• Lastly, the total tax revenue ex-USC Health and Pension Levies incorporates the €122mln delayed payment

So let me run through the above:

• Income Tax revenues, once the Health Levy is factored out (revealing better comparatives to 2010 and before) are up 7.65%, not 25.7% in January-September 2011 compared to same period of 2010 that the DofF claims. Compared to 2009, Income tax revenues are up just 0.6%, not 17.5% implied by DofF numbers. See any significant uptick in the economy feeding through to significant rise in tax revenues? Well, stripping out tax rates increases and tax bands widening, I doubt there is anything but continued contraction in like-to-like revenues here.
• VAT is still tanking compared to 2010 (-2.0%) and to 2009 (-7.7%) as correctly reflected by DofF data. And VAT revenue gap is widening from H1 2011 to Q3 2011 as compared against 2010.
• Corporation tax revenue is falling - down 6.1% on 2010 and down 21% on 2009 and that is amidst historically record levels of exports! So if you know some evidence that 'exports-led recovery' is taking place, it is not showing up in the Exchequer receipts.
• Excise is down 1.4% on 2010 and 2.5% on 2009 and that dynamic is worsening from H1 2011 to Q3 2011.
• Stamps are down 1.4% once we factor out the hit-and-run on Pensions, not up 58.7% as DofF claims.
• CGT, CAT are down in double digits
• Customs are up as DofF shows.
• So total tax revenues are up 1.17% in comparable terms to 2010, not 8.7% as DofF claims and relative to 2009 total tax receipts are down 5.37%.

Relative to target figures are also severely skewed by USC reclassifications and Pension Levy receipts and show, in the end, that in comparable terms we are not delivering on targets. Of course, USC reclassification is reflected in the targets, so without netting out USC, total tax receipts are 0.69% behind the target as set in the Budget, not 0.7% ahead of it as DofF claims. And that is inclusive of timing error of €122mln and excluding USC reclassification change.

So what about our cumulative 'progress' since the crisis on-set in delivering on fiscal stability? Let's compare each year achievements to 2007 levels of total tax revenues:

Again, per table above, the entire set of draconian, growth-retarding tax hikes that have hit households since 2008 delivered virtually no improvement on the crisis dynamics. The shortfall on tax revenue for 9 months January-September period relative to same period pre-crisis (in 2007) in 2010 was €9,290mln and it currently stands at €9,030mln - an improvement of €260mln or less than €30mln per month!

Can anyone still claim that Ireland's public finances are on track to achieve some meaningful targets whatsoever? As Seamus Coffey (in the blog post linked above) points out: "I must say that I cannot see the justification for greeting the figures in such glowing terms" as those used by Minister Noonan and the DofF. I agree.

06/10/2011: Has ECB done a sensible thing, at last?

Like a heavily Photoshopped version of Bill Gates can be expected to last, oh about a nanosecond in convincing the generation i-Apple of the need to buy Microsoft products, so did the interest rate’s junkies expectation that the ECB is about to drop rates to where Ben “The Helicopter” Bernanke has them proved to be short-lived.

Today’s decision  by the ECB not to alter the existent rates was both a shock to all those incapable of making a living in the real economy stagnated of cheap liquidity and to those who were expecting the ECB to miraculously discover some latent propensity to fuel inflation.

Yet, the decision was perfectly in line with ECB’s policies to-date. Worse, it was in-line with rational ECB policies to-date – the type of policies that should be predictable from the long-run perspective. ECB has held its nerve this time around. Here’s why.

Chart below shows the historical path relating ECB rates to the leading indicator for real growth in the euro area, eurocoin.

At the depth of the crisis back in 2009, rates consistent with the current eurocoin reading were justifiably lower than they are today because they were coming on the foot of severe contractions in economic activity from the tail end of 2008 and into 2009. In addition, monetary policy at the time was accommodative of growth recession, rather than of the banking and financial services crisis or the sovereign crisis. Today, the picture is different. While eurocoin has entered the period of signalling potential for renewed recessionary dynamics, the looming growth crisis is not underpinned by the change in economic fortunes for the euro area, but by a set of structural weaknesses (fiscal, banking and credit supply-related, depending on the specific country). Easy monetary policy can help, but it cannot restore the euro area economies to structural health. Instead, alleviating the pressure on growth through monetary tools can only delay the necessary adjustments in structural parameters. ECB is not about to do this and, perhaps, for a very good reason.

This means that the current leading indicators scenario should be compared not against 2008-2009 period, but against pre-crisis periods where eurocoin had also fallen to the current levels around zero. This is the period of December 2002-June 2003 and the underlying ECB repo rate at that time was around 2.5%. Get it? The policy-consistent move for ECB today would be from around 3% down to 2.5%, not from 1.5% to 1%. Given we are at 1.5%, the most consistent move would be to stay put. And this is what the ECB chose today.

By the way, in the long run, since eurocoin is the leading indicator of activity, there is a negative relationship between inflation and the growth projections it provides: higher growth signal into the future tends to coincide with lower inflationary pressures today. Or put differently, falling eurcocoin now is not necessarily a signal for well-anchored short-term inflationary expectations, something that coincides with the stated ECB concern expressed in today's statement.

Of course, ECB targets are set based on inflation, not leading growth indicators, although the two are strongly correlated with lags. Here, the same picture applies:

And the same logic holds. So based on inflationary dynamics, the ECB repo rate should be around 2.0% to 3.0% and falling from above 2% levels, but not below 1.75%. Given the starting position at 1.5%, a rational move would be to stay put. 

No surprise, then in today's decision. It could have gone like 25:75 - with lower chance for an irrational knee-jerk rates lowering reaction on the foot of the immediate crisis, and higher chance of what has been delivered.

Perhaps the only disappointing bit to today's ECB call is that the central bank will continue supplying unlimited liquidity to the insolvent banking sector under unlimited 1mo lending extended through July 2012. Perhaps the ECB had no choice, but to do that. Or may be a better option would have been to start properly assessing the quality of collateral pledged by the banks at the discount window. That would have achieved two things - simultaneously - both being good in the long run for the euro area banking sector:

1. It would have continued provision of supports to the banks with better quality assets (aka solvent but stressed banks), and
2. It would have put pressure on member states to purge their sick banks and drastically restructure the banking markets (getting rid of Dexia-esque zombies).

On top of that, ECB announced renewal of LTROs (12-mo and 13-mo) with delayed interest cover - in effect a heavy duty support for really stressed banks. Last time ECB did this was back in December 2009 and those operations were designed to shore up banks in the wake of the Lehman Bros bust.

Instead of applying some pressure on euro area's clownish 'leadership' in the banking sector, the ECB choose to call for some unspecified efforts by the banks to voluntarily shore up their balance sheets and retain earnings to provide cover for losses on their sovereign bonds exposures to weaker euro area countries. In the current climate, and with ECB providing unlimited liquidity, this is equivalent to suggesting that zombies should get out into the yard and work-off some of their rigor mortis. Good luck.

05/11/2011: Live Register surprises on improvement side

According to the latest Live Register data, standardised unemployment rate in September 2011 was 14.3%, down slightly from a rate of 14.4% in August and in line with the latest seasonally adjusted unemployment rate from QNHS (14.2%) for Q2 2011. The average unemployment rate during 2010 was 13.6% while the average rate for 9mos of 2011 to-date is 14.2%.

On a seasonally adjusted basis there was a decrease of 5,400 (-1.2%) on the Live Register in the month to September 2011 bringing the seasonally adjusted total to 442,200. Per CSO: "This decrease follows four consecutive months of relatively low increases in the seasonally adjusted series. Over the last twelve months the seasonally adjusted Live Register has remained in the relatively narrow range of

441,600 to 447,900". Importantly:

• We now have the largest decrease in seasonally adjusted LR since September 2007.
• Year on year LR declined 5,700 or 1.28% against previous month year-on-year increase of 1,200 (+0.27%)
• Q3 2011 average LR is now up 0.39% on Q2 2011 and 0.15% down on Q3 2010.

The above suggest significant decreases in LR, although the source of these decrease is unclear, as exits from benefits and/or emigration would reflect positively on LR figures, while having an adverse impact on overall economy.

Charts above illustrate the two trends - one of moderating decrease in LR and the other chart showing just how significant the drop of 5,700 is compared to historical monthly changes.

On a seasonally adjusted basis there were monthly decreases of 3,000 males and 2,400 females on the Live Register in September 2011 which implies that female unemployment (of lesser vintage than average male unemployment) is somewhat sticker for now. The same is confirmed by the annual data, with the number of female claimants increasing by 2,834 (+1.9%) to 155,453 over the year, while the number of male claimants decreasing by 7,810 (-2.7%) to 281,988.

The number of long term claimants on the Live Register continued to increase over the year with 41.9% of claimants in September 2011 on the Live Register for one year or more, up on 33.4% in September 2010.

Trends for national v foreign workers on LR and for casual and part-time LR signees are illustrated below:

So on the net - the new data is encouragingly strong on monthly decline side, but requires further confirmations in October-December to raise confidence that we are witnessing a sustained trend. It also requires cross-referencing to changes in the labour force that can only be performed using QNHS results for Q3.

05/10/2011: Ireland's 'Sustainable' Deficit through September

With Exchequer results for September (see earlier posts on the details of tax returns and tax burden), here's the update on overall Exchequer deficit for nine months through September 2011.

Overall 2011 Exchequer deficit currently stands at €20.66bn with ex-banks deficit at €12.31bn, implying net reduction in deficit ex-banks of €1.069bn on 2010 levels and absent pensions levy / expropriation 'measure', the deficit reduction achieved through September is now just €612mln.

This hardly represents a significant drop in our overall fiscal imbalances. Cumulative deficits for 2008-present are now at €76.76bn or €42,146 per each employed person or €54,990 per each full-time employed person in Ireland (per Q2 2011 QNHS numbers, not counting Nama debts, Government promisory notes and interest on these soon to be due). 

So a run-of-the-mill family of 2 full-time employed workers is now facing, on top of massive mortgage and Government-monopolized/regulated utilities and services bills, plus gargantuan costs of childcare, education, and health care, an additional debt pile of €109,000 on average, courtesy of the serial failure of the state to control its own spending habits. 

As the 'Green Jersey' crowd would say: "It's all sustainable" cause 'exports will save us' and we have 'jobs programmes' alongside 'homes retrofitting'/'windmills-potential' economy. Sure...

05/10/2011: Tax burden distribution: Q3 2011

Tax profile for September yielded another sign of continued shift in tax burden onto the shoulders of ordinary households, courtesy of:

1. Continued underperformance in corporate tax returns despite booming exports activity
2. Continued graft of household budgets under the USC and levies.

Overall tax burden in Q3 2011 has shifted as follows:

• Q2 2011 share of Income tax receipts in total receipts was 39.52%. Q3 2011 share of Income tax receipts in total receipts was 38.40% against Q3 2010 share of 33.20% and Q3 2007 share of 28.04%
• Q2 2011 share of VAT receipts in total receipts was 33.22%. Q3 2011 share of VAT receipts in total receipts was 33.17% against Q3 2010 share of 36.81% and Q3 2007 share of 37.41%
• Q2 2011 share of Corporation tax receipts in total receipts was 9.32%. Q3 2011 share of Corporation tax receipts in total receipts was 8.52% against Q3 2010 share of 9.86% and Q3 2007 share of 7.39%
• Q2 2011 share of Excise receipts in total receipts was 14.4%. Q3 2011 share of Excise receipts in total receipts was 13.4% against Q3 2010 share of 14.77% and Q3 2007 share of 13.79%
• Stamps, CGT and CAT combined share in Q2 2011 was 2.64% against Q3 2011 share of 5.67% and 4.73% in Q3 2010 and 12.67% in Q3 2007.

Charts to illustrate:

05/10/2011: Tax receipts for September

Tax receipts for September released yesterday show predictable evolution along the trend established in recent months - the trend of broadly matching the targets, but continuing to surprise on the downside in some core categories. In other words, no signs of recovery here, folks.

Here are the details.

Income tax came in at €9,254mln (this, of course, includes USC, rendering annual comparisons virtually meaningless). Compared to the target, Income tax receipts were up €147mln or 1.6%. Year on year Income tax came in at +25.7%, much of which is due to levies and USC, making multi-annual comparisons even less meaningful. Annual target for the category envisions an uplift of 25.3%yoy so we are slightly ahead of that for now.

The bright-ish spot that is Income tax is offset by the continued fall off in VAT. Through September 2011, VAT receipts stood at €7,994mln down on the target of €8,294mln (-3.6% or €300mln shortfall). Year on year VAT receipts are down 2.04% or -€167mln. VAT receipts are now down 7.7% on comparable period of 2009 and mark the worst year-to-date for 2007-present period.

Corporation tax - the Big White Hope of the 'exports-led recovery' is below target at €2,054mln (do notice that Government's Great Hope is less than 1/4 of the income tax as far as contribution to the overall Exchequer balance goes). Target was €2,085mln, so the shortfall now stands at -1.5% or €31mln. Corporation tax performance through September 2011 is now at the worst levels in 2007-present period despite all the record activities in exporting sectors, which again puts the boot into the Government's claims that exports-led recovery will restore our economy to health.

Excise tax is also underperforming the target, coming in at €3,229mln or €77mln (-2.3%) below the target. Excise tax revenues are also below 2010 levels by some 1.4% so far, implying that through September, 2011 is the worst year since 2007 in terms of excise tax collection.

In terms of smaller taxes:

• Stamps came in at surprisingly high levels of €1,124mln in 9 months through September, up €384mln or 51.9% on the target. This builds on gains in July and, most likely, represents incidental returns from one-off activities, such as €457mln expropriation of private pension funds via the FG/LP levy (HT to Jerry Moriarty of http://www.iapf.ie)
• Capital taxes are below target and posting the worst year so far for the entire 2007-present period.

Overall tax returns are now at €24.098bn, up 0.7% or €160mln on the taget and 8.7% on 2010 performance, with virtually all the yoy gains achieved due to USC reclassifying health levy into tax revenue, plus through increases in tax burden on households.

Relative to overall annual target, 0.7% increase on target through September 2011 and 8.7% increase yoy in outrun to-date are contrasted by the annual target set at 9.9% over 2010 outrun, so we do have to step up tax returns performance in months to come dramatically to deliver on the annual target.

More on the tax burden distribution in the subsequent post.

To conclude - tax receipts show no signs of substantive change in the overall Exchequer position on 2010 broadly confirming that 'exports-led recovery' thesis for restoring Irish economy to health, at the present, remains invalid.

05/10/2011: Profitability data for September

Irish PMIs for Manufacturing and Services, as well as their employment sub-components, are all continuing to signal lack of substantive recovery in the real economy. In the mean time, despite relatively strong confidence, profit margins are tanking across the main sectors. Here's the latest data:

• In September profit margin index (differential between output prices index and input prices index) in Services has fallen to -18.52 from -14.6. The index now stands well below all medium and long term averages. 12mo average is at -16.5, same as Q3 2011 average, a slight improvement on Q2 2011 average of -18.1. However, 2010 Q3 average was -9.1 and 2009 Q3 average was -5.6, implying dramatic worsening of the margins in the Services sector on 2009-2010. The last time profit margins were positive for Irish Services sector companies was in June 2009.
• In September profit margin index in Manufacturing was -9.67 adding onto dismal reading of -15.62 in August. 12mo average is at -19.6, and Q3 2011 average was -13.4, an improvement on Q2 2011 average of -19.7. Last time profit margins in manufacturing moved in favor of Irish producers was in February 2009.

As margins usually translate into expansion, investment and, thus, employment, the above numbers are not encouraging...

05/10/2011: Employment conditions in Services & Manufacturing

September PMI for Manufacturing and Services have signaled continued weaknesses in much of the activity, including:

• Core PMIs: Manufacturing PMI sliding deeper into red at 47.3 in September against 49.7 in August, while Services PMI posting weak growth at 51.3 in September up from 51.1 in August.
• Overall New Business Activity falling for Services from already contractionary 47.9 in August to 47.5 in September. In Manufacturing, New Orders activity fell from 57.7 in August to a miserable 45.8 in September.
• Much of the above performance is posting repeats month on month since May-June 2011 and there is little hope for this to change any time soon.

However, it is in the employment sub-indices where the entire nature of our exports-led 'recovery' becomes apparent.

• Employment sub-index in Manufacturing in September stood at 46.5 down from 51.1 in August, with year-to-date average of 50.7 and Q3 2011 average of 48.9.
• Employment sub-index in Services in September was 46.0 down from 48.2 in August, marking the fifth consecutive month of contracting employment.

The chart below shows clearly that we are in a jobless 'recovery' scenario for Services (with 'recovery' part of the equation being extremely weak) and in recession scenario for Manufacturing:

And the next chart shows that the 'exports-led recovery' tale is not alleviating the misery of unemployment reality, as predicted.

05/10/2011: Services PMI for September

Unlike Manufacturing PMI (see details here), Services sector PMI continued weak expansion in September. However, underlying momentum remains extremely weak and the tenuous recovery is, as previously, jobless. Here are the details:

Overall Services PMI rose from 51.1 in August to 51.3 in September - both the increase and the level above 50 are statistically insignificant, but welcome, nonetheless. This marks ninth consecutive month with index reading above 50, although only in January and February did the rate of expansion rise statistically above zero. 

The rise in overall activity was recorded in spite of a drop in overall new business from 47.9 in August to 47.5 in September. New orders fell at a statistically significant pace that was the fastest since December 2010. Per NCB statement: "Anecdotal evidence pointed to weakening economic conditions, and a related drop in client confidence."

 

The widening gap between new business activity and PMI core activity reading is now present in 10 of the last 12 months:

Confidence levels remained well in the expansion territory at 59.5 in September, virtually unchanged on August reading of 59.4. It is worth noting that confidence reading has no statistically significant bearing on actual activity as I have shown in previous research. Overall, per NCB release: "Respondents to the survey remained optimistic that activity will be higher in 12 months’ time than current levels, although the level of positive sentiment was largely unchanged from the muted
level seen in August. Growth of external demand was reportedly a factor behind the latest optimism." The reason for the use of the word 'muted' is that confidence levels readings stood above 60 in all months between December 2010 and July 2011 with the year-to-date average reading of 63.0 and Q3 reading of 60.3.

In contrast to the trend seen for total new business, new export orders rose in September to 53.1 from 50.4 in August - a statistically significant increase. With new business from abroad now rising in eight of the past nine months, the tenuous recovery in the sector is driven solely by exports (that and probably Nama, plus continuous reshuffling of chairs on the banking sector Titanic's decks). However, new exports orders expansion is still running below the longer term averages. Q2 2011 average was 54.0 against Q3 2011 average of 51.0 and year-to-date average is 53.3.

Services providers continued to cut the backlogs of work as slowdown in new orders hit and this was in line with previous months contractions.

Employment levels fell solidly, and at the fastest pace since April 2010 with Employment sub-index now at 46.0 against 48.2 in August. Employment in the sector has now been shrinking every month since March 2008 with exception of one month.

More on employment and profitability in both Manufacturing and Services in the subsequent post. Price movements in services between input costs and output prices continued to pressure profit margins in the sector:

03/10/2011: Euro area PMIs & Industrial Production - September

So for a poor start of the week, Monday data on manufacturing across the euro area continues to push the stagflationary growth scenario.

First, the eurocoin leading economic indicator came in at another contraction in September - see details here.

Second, gloomy PMIs readings across the entire euro area are, not surprisingly, confirming slowdown and contrasting the UK (although not too-cheerful 51.1 reading, on a foot of a 49.4 revision in August, with UK new export orders sub-index falling to 45.0 from 46.9, reaching the lowest level since May 2009):

• Euro area overall PMI at 48.5 in September against 49.0 in August, marking the worst monthly reading since August 2009. Output sub-index at 49.6 against 48.9 in August and new orders sub-index at 45.2 in September, down from 46.0 in August, lowest reading since June 2009. Rate of output contraction slows but new orders drop at fastest rate for over two years. PMIs fall in all countries except Italy. Steepest declines seen in Greece and Spain.
  
• German September PMI for manufacturing is at (barely expansionary) 50.3 from 50.9 in August and at the lowest level since September 2009.
• French September PMI-M fell to 48.2 from 49.1 in August. Now, recall that France posted zero growth in Q2 2011 when PMIs were above expansion line.
• Italian PMI-M up at 48.3 from 47.0 in August, implying that manufacturing is shrinking at a slower pace than before, but shrinking nonetheless.
  
• Spanish September PMI for manufacturing is at 43.7 down from 45.3 in August - both depressing readings signaling accelerating and deep contraction.
• Greece: 43.2 in September, down from 43.3 in August

So manufacturing activity overall is followed now by new exports fall off as well:


All of this has been building up for some months now. The latest Eurostat data (through July 2011) shows already nascent trends of weaknesses on manufacturing and broader industry sides:
Manufacturing:
New orders (lagging series in terms of signaling slowdown):
Capital goods (leading indicators):

And finally, overall industrial production:
Things are now looking structurally weak, rather than temporarily correcting.