| Spain Household Income Drops 10% to 2005 Level Posted: 21 Nov 2013 06:53 PM PST Those touting the "recovery" in Spain need to step back and ponder this headline story translated from Libre Mercado: household income falls 10% and back to 2005 levels. Interim results from the Living Conditions Survey released Wednesday by the National Statistics Institute (INE) show that the annual average net income per household in Spain stood at 23,123 euros in 2012, a decrease of 3.5% compared the previous year. Meanwhile, the average per capita income reached 9,098 euros, 2.4% lower than in the previous year.
The average income of Spanish households has fallen by 9.5% during the crisis, which translates to about 2,400 euros less per year between 2008 and 2012, as shown in the following table.
According to the survey, 16.9% of Spanish households had "great difficulty" making ends meet in 2013, the highest percentage recorded throughout the period of crisis. In 2012, households that expressed much difficulty to reach end of the month was 13.5%, ie 3.4 points lower than those found in this situation this year. In 2007, households that arrived at the end month with great difficulty were 10.7%, which rose in 2008 (12.8%) and 2009 (14.8%) and decreased in 2010 (14.2%) and 2011 (10.6%) to return to pick up the record level reached 16.9% this year.
The statistics also revealed that 40.9% of households are not able to handle unforeseen expenses, a proportion that has been declining compared to 2012, when households in this situation reached 41.4%. In addition, the INE notes that the number of households that could not go on holiday at least one week a year this year stood at 45.8%, also a record for the crisis, and far greater to the 37% recorded in 2007. Spanish Recovery? With declining income? At record levels? Really?! Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Eurozone Flash PMI Shows Slight Growth, France Back in Contraction Posted: 21 Nov 2013 12:43 PM PST The rosy eurozone growth estimates of a few months ago have bitten the dust already with the possible exception of Germany. The Markit Flash Eurozone PMI signals slowing growth for second successive month in November, with France leading the way. - Flash Eurozone PMI Composite Output Index at 51.5 (51.9 in October). Three-month low.
- Flash Eurozone Services PMI Activity Index at 50.9 (51.6 in October). Three-month low.
- Flash Eurozone Manufacturing PMI at 51.5 (51.3 in October). 29-month high.
- Flash Eurozone Manufacturing PMI Output Index at 52.8 (52.9 in October). Two-month low.
At 51.5, down from 51.9 in October, the flash estimate of the Markit Eurozone PMI ® Composite Output Index remained above the 50.0 no-change level for a fifth successive month in November, but signalled a modest easing in the rate of expansion for the second month running.
Output growth in manufacturing stabilised at a robust rate and remained stronger than service sector expansion, which eased to the weakest since August. Trends were also varied by country. The composite PMI covering both manufacturing and services in Germany rose to its highest since January, signalling increasingly robust growth and a seventh successive monthly expansion.
In contrast, the comparable index for France fell to its lowest since June, signalling a renewed decline after just two months of fractional growth. Elsewhere across the region, output rose for the fourth month in a row, but the rate of increase was the weakest seen over that period.
Private sector employment in the eurozone fell for the twenty-third consecutive month, with the rate of job losses accelerating marginally for the second successive month. Manufacturers reported the smallest drop in payroll numbers since July, while employment in the services sector fell at the strongest rate since August . By country, staffing numbers rose for the third time in five months in Germany, but fell at the steepest rate for six months in France. Elsewhere, the rate of job shedding eased to the second-lowest seen for over two years.
Chris Williamson, Chief Economist at Markit CommentsSome encouragement must be gleaned from the PMI signalling expansion of the eurozone economy for a fifth successive month in November, but the average reading over the fourth quarter so far is signalling a very modest 0.2% expansion of GDP across the region, and it looks like momentum is being lost again.
Any improvements were largely confined to Germany, where the PMI has notched up the best growth since mid - 2011 so far in the fourth quarter, signalling a 0.5% increase in GDP. France, on the other hand, showed further signs of being the 'sick man of Europe' with output showing a renewed decline and raising the risk that GDP could fall again in the fourth quarter, constituting a renewed recession. Meanwhile growth outside the 'big two' slowed to near-stagnation. Core vs. Periphery Output Core vs. Periphery Employment Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| China's 3rd Plenum Means Slower Growth; Australia's "One Trick Pony" is Biggest Loser; What About Canada? Posted: 21 Nov 2013 11:17 AM PST Here's some interesting analysis from Steen Jakobsen, chief economist of Saxo Bank, regarding implications of China's 3rd plenum. Before presenting the viewpoint of Jakobsen, some readers may be wondering "What is the 3rd Plenum?" Business Insider explains ... BI: What is the 3rd Plenum?
Bill Bishop: A Plenum is a meeting of the Communist Party's Central Committee. This Central Committee has 205 full and 167 alternate members, chosen at the First Plenum of the 18th Party Congress in November 2012. Each Party Congress lasts for 5 years, and with the exception of the first year there is usually one Plenum held per year. The Politburo, comprised of 25 members, meets more regularly, and the Standing Committee, made up of 7 members, meets even more frequently. Xi Jinping is the General Secretary of the Party and also holds the top posts in the State (President) and Military (Chairman of the Central Military Commission)
Third Plenums are seen as important because the First Plenum introduces the new leadership, the Second Plenum tends to be personnel- and Party construction-focused, while the third one is usually seen as the first plenary session at which the new leadership has basically consolidated power and can introduce a broader economic and political blueprint.
BI: Why is it significant?
BB: Not all Third Plenums are that significant, and plenty of reforms have happened outside of a Third Plenum, But, the Third Plenum of the 11th Party Congress in December 1978, held just two years after the death of Chairman Mao, the end of the Cultural Revolution and the arrest of the gang of Four, launched "reform and opening" and put China on its current path. Steen Jakobsen on 3rd Plenum Growth 3rd Plenum historically means SIGNIFICANTLY lower growth.
My take on politics remains the same: It's about consolidating the party's power not reform. They are increasing security and control at all levels. Do not forget the simple math of China. The local governments have 80% of all expenditure & expenses, but only 40% of tax receipts.
What now? Uniform sales tax? Yes.....but not reform in the western world meaning of the word.
The 3rd plenum will "cost" growth - and - China model needs to be recalibrated – both of which means lower growth probably 200-300 bps in total. From 7.5% official growth to 5.5% over next two-three year.
Australia's "One Trick Pony" is Biggest Loser
The biggest loser: Australia. The most direct link is commodity expansion and now slowing global demand.
RBA wants lower AUD according to their latest Minutes. I agree.
The equilibrium price for AUD is probably around .9000 but a .8500/.8200 is needed to kick start an economy which over the last decade not only became a "one trick pony" but also a country of expensive unit labor cost and strong unions.
It's time for Australia to undo its "Lucky One" illusion. Luck can only get you so far. What About Canada?I agree with Steen that Australia is likely to be the biggest loser. And if the overall thesis is correct, commodity exporters in general are in trouble. This puts Canada squarely in the spotlight. Emerging markets, especially those dependent on Chinese growth, are also in for a tough time. I have been talking about this for a long time actually. For example, please see my September 2012 post By 2015 Hard Commodity Prices Will Collapse; Australia's Mining Boom Dies (and the Official Denials Start)Additional Thoughts on Chinese GrowthIf anything, Steen's call for China GDP to slow "significantly" to 5.5% is actually on the optimistic side. 3% average for the rest of the decade is more like it. Meanwhile, watch the Australian dollar as the Reserve Bank of Australia (RBA) becomes the next player in the central bank competitive currency devaluation game. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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