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Eurosis Is Back With A Bang: PMIs Collapse, Unemployment Surges To Record
Yesterday we poked fun of Goldman for suggesting that the reason for the late-day sell off was "Prudent profit-taking as folks remember Europe isn’t closed tomorrow." Turns out Goldman could not have been more right: around 4 am Eastern this morning Europe reported a series of economic updates which showed that the European economy continues to be nothing but a slow motion trainwreck and is getting far worse. Starting with final April Eurozone Manufacturing PMI which printed at 45.9 vs an initial print of 46.0, a 9 month low with a core breakdown is as follows: Italian manufacturing PMI 43.8 at a 6 month low, est 47.1 (prior 47.9), German manufacturing PMI at a 33 month low 46.2 vs initial 46.3 (prior 48.4), France manufacturing PMI 46.9 vs initial 47.3 (prior 46.7), which also followed Italy by recording sharpest drop in manufacturing new orders in 3 yrs in April, and so on as can be seen in the chart below. As every sellsider who has opined so far this morning, these numbers are all "hugely disappointing."
Additionally, unemployment data out of Germany came worse than expected, with a +19,000 jobless print on estimates of a -10,000 decline, following a -18K print last. The unemployment rate was unchanged at 6.8% although March was revised higher from 6.7% to 6.8%. This will cause many to worry about the German GDP number which if printing negative will push the core economy of Europe into a double dip next. Elsewhere the Italian unemployment rose to 9.8% on expectations of 9.4%, but more troubling is that the youth unemployment in Italy rose from 33.9% to 35.9% in one month. Overall the eurozone unemployment rate followed the following trend: Euro 9.9%; 10.3%; 10.4%; 10.6%; 10.6%; 10.8%; 10.8%; 10.9%; and the latest print of 10.9% was an increase from 10.8% before, and sad to say, the highest print on record.
Some instant analysts views on the unemployment numbers:
MARTIN VAN VLIET, ING
"The grim unemployment figures for March will likely encourage talk about a long-overdue 'growth pact' for the euro zone. The number of jobless in the 17-country region rose by 169,000, marking the 11th consecutive monthly rise while pushing the unemployment rate up from 10.8 percent to a fresh 15-year-high of 10.9 percent.
"The figures clearly highlight the diverging economic paths of the euro zone and the United States, where unemployment is falling. In fact, the gap between euro zone and U.S. unemployment rates hasn't been this wide since the end of 2007.
"The further increase in overall euro zone unemployment reflected increasing disparities between countries, with the jobless rate in Germany remaining steady at 5.6 percent and unemployment in Spain, Portugal and Italy increasing further from already elevated levels (to, respectively, 24.1 percent, 15.3 percent and 9.8 percent).
"The depressingly high unemployment rates in southern Europe are partly caused by structural factors, but also provide a clear indication of the short-term economic pain inflicted by the draconian austerity programmes.
"The increasing economic divergence across the euro zone is making it very hard for the ECB to set its 'one-size-fits-all' monetary policy. Indeed, concerns about the ECB's policy being too loose for Germany appear to be mounting. That said, higher inflation in Germany makes it easier for southern Europe to restore competitiveness and, as such, may be just what the doctor ordered.
"Looking ahead, survey measures of hiring intentions point to further increases in unemployment over the coming months, so we would expect unemployment to breach the 11 percent threshold before long. Provided the euro zone starts to emerge from its double dip recession in the second half of this year, we see the jobless rate peaking at about 11.5 percent."
HOWARD ARCHER, IHS GLOBAL INSIGHT
"...This was the 11th successive monthly rise in euro zone unemployment, and brought the cumulative rise to 1.739 million since April 2011."
"Most countries saw unemployment increase in March although the increase was generally moderate in the core northern euro zone economies. Worryingly but unsurprisingly, unemployment continued to move sharply higher in the struggling southern periphery countries - Spain, Italy and Portugal. Greek unemployment is also rising sharply although there was no data for March.
"With the euro zone almost certainly having suffered a second successive GDP decline in the first quarter of 2012 and seemingly headed for further contraction in the second quarter, and with overall euro zone business confidence taking a renewed appreciable downward lurch in April, the likelihood is that the euro zone unemployment rate will move significantly higher, although the situation is likely to vary appreciably across countries.
"Indeed, it now looks odds-on that the euro zone unemployment rate will move appreciably above 11.0 percent over the coming months with an ever growing danger that it will reach 11.5 percent.
"Companies generally are under serious pressure to keep their labour forces as tight as possible to contain their costs in the face of current limited demand, squeezed margins (with input costs currently elevated), strong competition and uncertain growth outlooks.
"Significantly, the European Commission's business and consumer survey shows that employment expectations weakened in all sectors in April, when they particularly worryingly sank to a 25-month low among services companies.
"Furthermore, public-sector jobs are likely to be pared in a number of countries going forward as part of the austerity measures that are increasingly being implemented.
"Meanwhile, the further marked rise in euro zone unemployment in March maintains belief that consumer spending will be generally muted in the near term at least, especially as consumers are also facing sticky inflation, muted wage growth and tighter fiscal policy in many countries."
NICK KOUNIS, ABN AMRO
"It was in line with expectations. I think it is going to keep on rising over the coming months. We are currently in a moderate recession. Things may improve in the second half of the year, but we are expecting more a stabilisation then. We are going to be below trend growth for some time.
"Labour market adjustment tends to happen with a continual lag and I think the picture will be weak for the foreseeable future. You have ongoing budget cuts and the ongoing crisis. The weak labour market is also bad for consumption. The big hope for Europe is the global economy, that it will catch on the coattails of global growth."
So while futures on this side of the pond now actively ignore everything that is happening in Europe, the EURUSD has tumbled overnight. Yet if Europe is any indication, the collapse in the world's largest economic block is not only not slowing but is accelerating as the region tried hard to get back to a viable debt ratio: something the US will not do until it is far too late.
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ES down almost a full handle!
Europe is an economic dead zone obvious to anyone with 2 brain cells to rub together. When the locals wake up and realize that their standard of living will drop 40% courtesy of the banksters, then it should get interesting.
Euro collapse is "coming round the mountain when she comes! when she comes!"
We should stop calling it the Eurozone crisis. Rather its 'Eurozone Financial Herpes'. The gift that keeps on giving.
Arrived back in the Uk after being in Angola....more jobs in Angola
ECB Fear Indicator near record level
Banks deposited 790 billion with the ECB
http://www.cds-info.com
Just more proof that there is even more opportunity for the U.S. to expand its economy. /sarcasm
QE3 getting closer.
Europe going to do austerity & public expenditure quota >50% & g r o w t h & debt reduction all at the same time. That's a real gas!
Gordon Brown expanded the state's share of GDP from 35% to 53%, and that didn't magically solve all the problems. But now, according to Krugman and others, somehow if we expand that to 60% all our problems will DEFINITELY be solved.
And communism will DEFINITELY work if we just try it one more time. And I won't come in her mouth. And the cheque is in the mail. And the dog ate my homework. And Brown has eliminated boom and bust.
instead of the banks "buying time" this job would fall to government. i agree "more command and control but to what end?" what does "coming to a woman's mouth" mean? sounds dangerous...
...and we have to sign this bill to see what's in it... & we have to elect these politicians if want to have any chance of having hope & change...
~~~
"You ain't seen nothin yet"
Obama '12 campaign slogan (so click the ad link to tell Michele... YOU'RE IN!)
I thought his campaign slogan was "forward"...
...which incidentally also is that of the marxists. And fascists. Well, anyone who doesn't believe in liberty and democracy, it would seem.
You missed the first word... Due to technical difficulties, the first word was clipped...ie: Bend Forward...
/sarc
but today the Reichspropagandaministerium reported that unemployent just sank to a new low of under 3 million.
In New York, Detroit and other Northern Cities during the Depression but especially during and after the war there was a massive migration north as "that's where the jobs were." this period has a striking similarity to that time...a "migratory approach" you might say. When i was in Germany i struck by the many non-Germans in certain areas running businesses, etc...Are you noticing more of that?
And the Dow Jones reaches a 4 year high yesterday. Markets keep going up as news gets worse. How long can it last?
http://bullandbearmash.com/index/djia/daily/ (add another 120 points from yesterday, close was up 60)
You can be emailed when this chart updates later today.
http://bullandbearmash.com/members/signup/
For as long as the Fed/Wall St syndicate channels funds into equities.
I think the story literally was "the story" as to why the market keeps pushing higher: the Michael Milken Conference in Los Angeles. He was "the 80's guy" for finance...for those of you who don't remember is specialty was junk bond finance. we were coming out of the 70's...folks wanted to get out from under huge interest rate expense. He was the go to guy. My personal view is that he was hounded out of "the village" as part of a "we don't understand you" and not because he was doing anything wrong. Indeed he was providing a tremendous boost to the economy at the time and now "there are many Michael Milkens" trying to emulate him. Hence the conference. So it makes me ask myself this: "is Los Angeles...a place where the Dodgers were just sold for 2 billion dollars btw...buying up all the crap debt from Wall Street for pennies on the dollar and now discovering it's worth 10 times what they paid for it?" My guess is yes...and as this realization dawns on the market..."they can roll over their debt at even lower rates"...it goes up on that news. this is type of liquidity that does not appear on any volume chart btw. these are DEBT instruments. Just speculating here of course...
It's quite simple really. Here's the formula:
Overnight headlines = algo's sleeping.
Sun rises on Wall Street = algo's ramp on freshly baked "US headlines".
This works...until it doesn't.
What shocks me is that hackers have not targeted the algo farms on WS yet. That's the true tool of choice for Bernanke and his merry band of fiat frenzied banking puppets.
iDepression.
I think the Bernie told these bank f_ktards, "No QE till you cough of the gold bitchezz!"
There is quite a contrast between yesterday's US ISM report and today's very poor numbers from the Euro nations. But I note that there is a further likely consequence.
I guess more and more will be wondering about that question...
"Greek unemployment is also rising sharply although there was no data for March." They must've fired the whole Bureau of Statistics.
P.S. I'm new here, who do I get to fight with?
welcome. I'd say it's quite common to attack someone's comment. After a while you might consider arguing with one of the Tylers - this specific one has an EUR allergy - though I don't attack him, I save my powder for the other one (that goes bald all over the articles).
"ThirdWorldDude" with Orange Clockwork avatar? At this time? Ironic Brit, I'd say, or Eastern European Whiz Kid working in London but Disillusioned by the Global Financials after a few years of great bonuses...
Thanks. Not a Brit (thank God), more of the second, currently in a rather miscoloured country in the upper part of this map -> graphics.thomsonreuters.com/12/04/EZ_RECCMP0412_SB.html
I wouldn't have said Iceland was miscoloured :-)
I would imagine it whites out sometimes.
Oh, you mean you're in a blue country that should be red?
Reminds me of that old joke:
Q: How do you buy a small bank?
A: Buy a big one and wait.
Just wait it out. That blue will soon turn red. Probably even start bleeding.
That's odd - I could have sworn I saw an unemployment figure of 21.7% for Greece earlier this morning.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_02/05/2012_440175
It's probably gone up again by now as that was several hours ago.
I'm not looking for a fight myself but I suggest you pick on one of the Americans here as they are usually overweight and unfit due to sitting in front of a screen all day going, "If only I had made that trade. Those bitchez. etc."
That should see me good for a -67 score :-)
I'm feeling mischievous today.
+1, after one minute already you got a minus one! LOL
Yes, and most of them aren't out of bed yet!
It depends. Where do you stand on Ron Paul?
I hope he doesn't end up like JFK... however, I doubt that he's going to be (s)elected because of his loose (more like non-existing) ties with Da Boyz from Da Club.
Wait. I'm confused. Does this mean bad news is bad news? Or am I just too early for the spin?
Bad news in Europe means US equities sell off = bad news. Bad news in US means QE3 = Good news
Looks like Ireland is above 50% and doing a good bit better than Germany.
Sitting here in Dublin, I can assure you that any good news coming out of Ireland is government produced spin and bollocks. The reality on the ground is massive unemployment (even at over 14% officially, those figures are masked by large scale emigration, kids all going into third level education after school, third level students staying on in education, many unemployed going back to education (sometimes forced to) - all keep the unemployed figures down - all this plus the fact that many people aren't counted amongst the unemployed numbers e.g. the army of self-employed and freelancers who haven't found any work for the past couple of years. They even count the 16-18 year olds when it comes to the number of people in employment but exclude them when counting the unemployed! Meanwhile the figures for the number in employment have been dropping like a stone too. More unemployed, less jobs on the payroll.
Despite all the cuts, the budget deficit is still double figures and the debt is still growing, fast approaching 120% of GDP.
Ireland is toast. Definitely going to need a second bailout.
Isn't your economy now based on supporting the Gypsy wedding industry? Seems like you should all be pretty busy with that.
I think it's becoming clear that Europe needs to stop denigrating the policies in the US, which are clearly working, and start looking at the policies in the EU which are clearly causing a depression. This has been going on since 2008. Time to wake up and smell the French roast.
policies? plural and unspecific? If you keep your comment so ambiguos you don't say really much
debauch the dollar, invade foreign countries that represent no threat to anyone, nationalize industries, take over your media so we can tell you what to think...that sort of thing.
We did that last time. Your turn.
@Tyler - a slow motion trainwreck? Nothing slow motion about it sitting next to it here in Europe!
Pointing fingers at US debt, which is entirely sustainable in the medium term (like until growth picks up a little more) is not going to help the EU solve it's fiscal crisis. Nothing has been done to stimulate growth in the Eurozone since the financial collapse of 2008. EU leaders have steadfastly pursued a course of action that has directly led to where they stand now in the face of mounting evidence that their policies are wrong.
Raising interest rates was flat out ignorant and they have only begun to suffer for it. Austerity only is beginning to really have an impact and things will get worse from here until those policies change. Personally, I don't mind if they want to keep kicking the can down the road and living in denial, I've been shorting the Euro against the $ since 2009. It's getting clearer by the month who has the more sound fiscal & monetary policies in place, but for those of you "who could have seen this coming" types out there...stay tuned.
This is the Euro area collapse that I've been expecting for a while. Took a while to gain momentum, with fits and starts over the past 6-8 months. But it's finally here. The car has gone over the cliff and is beginning its rapid descent into the valley below.
collapse? of what exactly, and compared to whom?
The big hope for Europe is the global economy, that it will catch on the coattails of global growth."
Oh man, that is both funny and pathetic at the same time. Global growth? Global growth? Where on the whole fucking planet is there currently economic growth? Not in the U.S., not in Japan, not in China unless you believe the bullshit Chinese government pronouncements. Maybe a little in Brazil or Russia. Oh wait, I've got it. Iceland is really experiencing economic growth. That's what Europe meant. Iceland will pull Europe on its coattails.