My comment: Some areas in Europe should start to pay attention to this index seriously as it falls sharply, from 74.9 to 67.1, and those areas are close to 50 and even below.
Peace and best wishes. Xi http://www.bloomberg.com/apps/news?pid=20601087&sid=aaK0Pn.3azuQ&refer=home Jan. 8 (Bloomberg) -- European confidence in the economic outlook fell to the lowest on record and unemployment rose to a two-year high, adding to pressure on the European Central Bank for more interest-rate cuts. An index of executive and consumer sentiment dropped to 67.1 in December from 74.9 in the prior month, the European Commission in Brussels said today. That is the lowest since the index started in 1985. Separate data showed euro-area unemployment rose to 7.8 percent in November from 7.7 percent a month earlier. European companies are cutting jobs and reducing investment in order to weather the first recession in the euro region’s 10- year history. A combined rate cut of 1.75 percentage points since early October and billions of euros in stimulus measures have failed to reverse the slide in confidence and data today confirmed the economy contracted for two straight quarters last year. “It’s a real shocker,” said Martin van Vliet, senior economist at ING Bank in Amsterdam. “Today’s worse-than-expected data make an even more compelling case for the ECB to cut rates significantly further from here.” Investors indicate they expect the central bank to reduce rates at least 50 basis points, or hundredths of a percentage point, at its next meeting on Jan. 15, Eonia forward contracts show. That would take the benchmark rate to 2 percent, which would be a three-year low. Job Cuts Paris-based Alcatel-Lucent SA, the world’s largest maker of fixed-line networks, last month said it will cut 1,000 more managerial jobs and take other measures to reduce costs by 1 billion euros ($1.4 billion) in each of the next two years. Corus, the European unit of India’s Tata Steel, said on Dec. 31 that it may cut the workweek of 6,400 workers by an average of one day, equivalent to eliminating 1,100 full- time jobs. A measure of manufacturers’ confidence fell to a record-low minus 33 in December from minus 25 in November, the commission report showed, while consumers’ expectations of unemployment rose to the highest since December 1993. The economic situation is getting “significantly worse,” Amelia Torres, spokeswoman for European Union Monetary Affairs Commissioner Joaquin Almunia, told journalists in Brussels today. “I hope we will be able to avoid massive job losses because of the recovery plan that we are setting up.” In December, EU leaders pledged economic-stimulus steps worth 200 billion euros, or about 1.5 percent of gross domestic product, to combat the fallout from the financial crisis. Torres said the government plans announced so far amount to about 0.9 percent of GDP, with Germany scheduled next week to approve a second package for that nation of up to 50 billion euros. Struggling to Cope Companies are struggling to cope with the economic downturn that began in last year’s second quarter and may extend through this year. Euro- area GDP shrank 0.2 percent in the third quarter from the prior three months, which saw a similar contraction, the EU’s statistics office said in a separate report today. In the fourth quarter it could contract 1 percent or more, said Ken Wattret, senior economist at BNP Paribas in London. “Across the board, confidence is collapsing and the European Commission data are indicative of a massive contraction in output -- imminently,” Wattret said in a note to clients. “The euro-zone economic-sentiment data for December reinforce our view that the economy is in meltdown.” Exports from Germany, Europe’s largest economy, plunged 10.6 percent in November, the biggest drop since records for a reunified Germany began in 1990, the Federal Statistics Office said today, and manufacturing orders fell for a third month. Volkswagen AG, Europe’s biggest carmaker, said on Jan. 5 that its U.S. sales fell 14 percent in December. ‘Gloomy’ Outlook The economic outlook is “gloomy” for both the U.S. and Europe, Nobel laureate economist Joseph Stiglitz told reporters in Paris today. “Things at the end of the year are probably going to be worse than they are now.” Amid global concerns about deflation after a 70 percent drop in the cost of crude oil from a July peak, price expectations fell further last month, today’s survey showed. Manufacturers’ selling-price expectations dropped for a fifth month to the lowest level since June 2003. Data yesterday showed that producer prices fell the most in 27 years in November, dropping 1.9 percent from the previous month, an indication inflation will slow further. “It serves as a reminder to the ECB that it’s facing a serious risk of undershooting its inflation target in the medium- term,” Van Vliet said. Today’s GDP report showed that investment fell 0.6 percent in the third quarter in the first back-to-back decline since 2002. Household spending stagnated after dropping 0.2 percent in the previous quarter. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/world-thread?hl=en -~----------~----~----~----~------~----~------~--~---
