European Commission Economic Sentiment Indicator, September 2023: The European Commission (EC) draws from a range of surveys to construct confidence indicators for five sectors of the economy and then uses these to calculate up its Economic Sentiment Indicator (ESI) which is converted to an index based on the long-run average.
The September* reading showed another small fall in the overall ESI for both the EU and the Euro-zone. In both regions, the ESI has been falling since February and it is now below the post-pandemic low point that was recorded in October 2022. Using the EU aggregate, the weakest sector this month was consumer confidence, with more modest falls for the retail and construction sectors; services confidence was broadly unchanged from the August* reading while the industry sector managed a small improvement.
This uptick in industry confidence came despite another weakening of the assessment of the current level of orders books; this was just outweighed by an improvement in the expectation for production in the coming three months and less frequent reporting that stocks of finished products were assessed as being too large/above normal. The report covers two other questions that are not used in calculating the confidence indicator – export order books remained broadly stable and output in the previous 3 months was less negative than in the previous month.
There is a range of movements in the ESI calculation by country; among the larger EU economies, three was a sharp fall in Spain and Italy, broadly neutral positions in Germany, Netherlands and Poland and a significant recovery in France.
As mentioned earlier, the ESI is calculated against the long-run average, so we can look at the position of the individual countries against their own historical situation which is better than a simple comparison between countries. In the latest reading, most countries still have an ESI below 100 with only 6 exceptions – Bulgaria, Croatia, Cyprus, Greece, Malta and Romania. With the significant falls in the ESI for both Italy and Spain these countries fell back below the long run average this month. The EU candidate countries also participate in this survey with Albania and Montenegro also having an ESI reading above their long-run average but North Macedonia fell back under 100.
* Note that, as with the CBI survey, although dated September, the data collection period was from 1st to 21st of the month, so the trends really refer to August.
You can download the EC report and statistical annex from their web-site at https://ec.europa.eu/info/business-economy-euro/indicators-statistics/economic-databases/business-and-consumer-surveys/download-business-and-consumer-survey-data/press-releases_en or you can request it from MTA.
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USMTO and CTMR, July 2023: The US Manufacturing Technology Orders (USMTO) programme tracks orders in the US market, based on the reports from participants. Orders were -12.7% lower in the first seven months of 2023 compared to the same period of 2022 (January to July). The 12-month rolling trend – effectively an annualised rate of change – was -16.7% lower than in the previous 12 months.
The AMT Press Release notes that although demand from job-shops was at the lowest level since August 2020, other parts of the manufacturing sector have picked up some of the slack – this has come especially from sectors that have benefitted from re-shoring or government investment in infrastructure. In particular, they mention manufacturers of valves and motor vehicle transmissions.
The regional pattern for the first seven months of the year shows that the downturn is concentrated in the West (orders down by -34%) and South-East (-25%), with the other 4 areas only showing single-digit declines with the North-East (-2%) having the smallest reduction in orders compared to the same period last year.
The US Cutting Tool Market Report (CTMR) tracks orders for tooling on a similar basis. In this part of the market, although business was down on the June figure, it was higher than a year earlier and for the January to July period, they report that cutting tool consumption was +9.4% higher than a year ago.
Two factors are mentioned in the CTMR Press Release – the labour disputes in the automotive sector are likely to have an impact on demand from this industry in the near future and the role of inflation in boosting the value totals reported from the survey which hide a less positive picture for volumes.
You can download the press releases for the two surveys from the AMT web-site at www.amtonline.org/topic/intelligence, with the CTMR release also published on the USCTI web-site at www.uscti.com; alternatively, you can request either or both releases from MTA and we can make sure you get them when they are published each month.