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European Recession Deepens As German Industrial Output Slides More Than Greek, Despite Favorable ZEW

Tyler Durden's picture





 

Earlier today we got another indication that Europe's recession will hardly be a "technical" or "transitory" or whatever it is that local spin doctors call it, after the European December Industrial Output declined by 1.1% led by a whopping 2.7% drop by European growth dynamo Germany, which slid by 2.7% compared to November (which in turn was a 0.3% decline). This was worse than the Greek number which saw a 2.4% drop, however starting at zero somewhat limits one's downside. Yet even as the German economic decline accelerated, German ZEW investor expectations, which just like all of America's own consumer "CONfidence" metrics are driven primarily off the stock market, which in turn is a function of investor myopia to focus only on nominal numbers and not purchasing power loss - a fact well known to central bankers everywhere - do not indicate much if anything about the economy, and all about how people view the DAX stock index, which courtesy of the ECB's massive balance sheet expansion, has been going up. And if there has been any light at all in an otherwise dreary European tunnel, it has been the dropping EURUSD, which however has since resumed climbing, and with it making German industrial exports once again problematic. Which in turn brings us back to the primary these of this whole charade: that Germany needs controlled chaos to keep the EURUSD low - the last thing Merkel needs is a fixed Europe. It is surprising how few comprehend this.

Some more from Bloomberg:

Production in the 17-nation euro area fell 1.1 percent from November, when it remained unchanged, the European Union’s statistics office in Luxembourg said today. Economists had forecast a drop of 1.2 percent, the median of 36 estimates in a Bloomberg News survey showed. From a year earlier, production decreased 2 percent.

 

The region’s economy probably failed to grow in the fourth quarter as governments toughened austerity measures, undermining spending and hiring, just as global exports weakened. While industrial orders dropped in November and unemployment held at the highest in more than a decade in December, European Central Bank President Mario Draghi said on Feb. 9 that he sees “tentative signs” of economic stabilization.

 

“The euro-region economy probably slipped into contraction in the fourth quarter of 2011 and may continue to shrink through the first half of 2012,” said Andreas Scheuerle, an economist at Dekabank in Frankfurt. “The fiscal crisis still has the potential to hurt the economy and there are enormous risks.”

 

Gross domestic product probably dropped 0.4 percent in the three months through December after rising just 0.1 percent in the previous three months, according to the median estimate of economists in a Bloomberg survey. That would be the region’s first quarterly contraction in 2 1/2 years. The statistics office will release the GDP figures tomorrow.

Already rising unemployment has only one direction to go:

With economies cooling across the region and export orders weakening, companies have been forced to lower costs to help protect earnings. Employers around the globe are cutting jobs more than three times faster than in 2011, Bloomberg data show.

Capital goods slide

Output of capital goods in the euro region fell 0.8 percent from November, when it rose 0.2 percent, today’s report showed. Production of durable consumer goods rose 0.2 percent and energy output fell 2 percent. Production of intermediate goods fell 0.7 percent.

 

Siemens AG, Europe’s largest engineering company, on Jan. 24 reported earnings that missed estimates as profitability dropped at its four main units, and predicted that Europe will slip into recession in the coming months.

 

“The uncertainties of the ongoing debt crisis have left their mark on the real economy,” Siemens Chief Executive Officer Peter Loescher said on that day. “Although a recovery is expected in the second half of the year, we must work hard to achieve our goals.”

Luckily, there's the economy, and then there is the ECB, which at this point has come to a backdoor agreement with Germany that as long as it does not monetize "strongly" or at least pretend to accept worthless collateral in exchange for trillions in cash, all shall be well - this is a development which the Fed is observing very cautiously, and following recent moves by the BOE, BOJ and ongoing easing by the ECB, will hardly stay pat as the rest of the world takes the lead in the global currency debasement race.

 


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Tue, 02/14/2012 - 08:50 | Link to Comment SilverIsKing
SilverIsKing's picture

Time for a printer upgrade. HP's got some new ones.

Tue, 02/14/2012 - 08:53 | Link to Comment EscapeKey
EscapeKey's picture

And yet, futures rise.

If you look at the DJIA over the past two months, you can virtually draw a straight line through the daily closing values. Just as you could for just about the entire year 2010.

The "free" market is as fake as a $3 bill.

Tue, 02/14/2012 - 08:53 | Link to Comment falak pema
falak pema's picture

MSM media on this :

The ZEW Center for European Economic Research in Mannheim, a measure of German investor confidence rose to 5.4 in February, from -21.6 the previous month. Investor confidence, was at a 10-month high.

Read more: http://www.businessinsider.com/10-things-february-14-2012-2#ixzz1mMOekrlG

Tue, 02/14/2012 - 08:58 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

no problemo

just a new "target" needed

or "2"

the swissies may take the toboggan run of their lives before they get outa the shit they dove into!

if they can get out, at this point...

just sell all your gold and silver to the fuking banksters b4 friday, BiCheZ!

that way, you'll have plenty of paper money and won't hafta stand in line at the ATM @ 4AM monday morning wondering where is the world is chiquita freaking banana

L0L!!!

Tue, 02/14/2012 - 08:59 | Link to Comment tinsmith
tinsmith's picture

CNBC headline - "Stocks seen higher after positive German data". WTF?

Tue, 02/14/2012 - 09:07 | Link to Comment Ghordius
Ghordius's picture

"Which in turn brings us back to the primary these of this whole charade: that Germany needs controlled chaos to keep the EURUSD low - the last thing Merkel needs is a fixed Europe. It is surprising how few comprehend this."

Perhaps few comprehend this because it's not in the correct causality chain. And it's mixing up the agenda of the German gov with the various other agendas. From the German industrialist's point of view, for example, a stable FX is better than the "beggar thy neighbour" FX devaluation scheme that for example the FT's economists love so much. Quality in products demands stability in prices and FXs.

Banks, on the other side, love churn. But the Germans (and most other EU countries) still collectively see the banks as a supporting pillar to the real economy, instead of an industry in it's own right.

Tue, 02/14/2012 - 09:02 | Link to Comment youngman
youngman's picture

It does not matter...stocks are going up....it really does not matter.....

Tue, 02/14/2012 - 09:15 | Link to Comment scatterbrains
scatterbrains's picture

The more fiat they print the harder the economic brakes lock up as a result of energy prices ramping higher. Keep printing bitches eventually you'll succeed in destroying what tiny bit of growth is left.

Which leads me to wonder about gold.  Can fuel prices crowd out gold demand?  If everyone has to spend their last dollar on fuel to get to work what's left to buy gold? (micro view)  Macro view is who gives a fuck if the little people go broke fueling their cars. I have trillions of paper fiat I need to hedge with something real.    Which comes first though ? Place your bets bitches.

Tue, 02/14/2012 - 09:10 | Link to Comment giovanni_f
giovanni_f's picture

didn't know that Greece has an industry for good

Tue, 02/14/2012 - 09:12 | Link to Comment Schmuck Raker
Schmuck Raker's picture

Interestingly, EuroZone Y/Y IP now dropping twice as fast as EU27 (-1.1% vs -0.6%).

Full EuroStat report (graph on page one = 1K words): Official Report

Tue, 02/14/2012 - 09:15 | Link to Comment ebworthen
ebworthen's picture

Perception is reality, until reality forces it's perspective.

How can otherwise intelligent beings place false values on things?  Black Tulips, Pet Rocks, Cabbage Patch Dolls, Furbies, Zhu-Zhu pets, Bobble-Head Sports figures, Air Jordans, etc., etc.  Seemingly no end to the insanity.

 

Tue, 02/14/2012 - 09:15 | Link to Comment q99x2
q99x2's picture

Italy, Portugal, Spain and Ireland are about to get a few new submarines. Greece has enough to last them until March.

Tue, 02/14/2012 - 09:17 | Link to Comment Vince Clortho
Vince Clortho's picture

In other news, Banks with unlimited, freshly printed free money continue a buying orgy, pushing stock prices into the upper stratosphere.

Tue, 02/14/2012 - 09:19 | Link to Comment BlackVoid
BlackVoid's picture

MOPE is alive and well (Management of Perception Economics - Jim Sinclair)

Tue, 02/14/2012 - 09:37 | Link to Comment waterdude
waterdude's picture

leave it to zerohedge to try to paint a good number bad and 416 guys who keep loosing money on shorts to comment.  Economic expectations index jumped from -21.6 to +5, beating the locals top end forecasts. Highest since April 11.  And the 6mos average picked up for the first time.  Germany's out of recession in 1q.  Score board kids - read it.

 

Tue, 02/14/2012 - 09:49 | Link to Comment Rynak
Rynak's picture

The only "good number" in that, is the "sentiment" number, which relative to the other numbers, and it's steepness, makes zero sense.

Go back to blowing your employer's dick, bitch.

Tue, 02/14/2012 - 09:53 | Link to Comment ebworthen
ebworthen's picture

That scoreboard must be like the one in "The Sting" in Shaw's Parlor, phoney baloney.

Besides, after six months of relentless MSM propoganda and BLS fudged statistics, it should be no surpirse that "expectations" are not meeting reality.

 

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