| August 14, 2014
There’s been a bit in the press recently about the Spanish economy outperforming Germany.
The latest development in this story was today’s (Aug 12) German ZEW economic sentiment survey, which was very weak. It was no real surprise to anyone in the markets, but particularly not to RavenPack clients given the ability to analyse all geopolitical and macroeconomic events.
Figure 1 below shows all the detected economic events and sentiment for the Eurozone countries over the last month. As you can see, Spanish sentiment has indeed been higher than Germany (blue is positive, red negative and white neutral), although German sentiment overall remains slightly positive. The large slice of red against Germany is the business confidence sentiment.
Separately, note how negative sentiment toward Italy has been. France is also hovering around neutral, slightly weaker than Germany. Below we drill down into the major Eurozone economies to see what has been driving sentiment at a local level.
As you can see from figure 2, Germany has been held back by business confidence measures. Economic growth guidance, industrial production, consumer confidence and unemployment categories are all on the right side of neutral.
Contrast Germany’s sentiment with Spain’s (shown in figure 3) and you can see why market participants have been saying Spain is outperforming Germany. Pretty much all the event categories are looking healthy save retail sales and produce price and purchasing managers’ indices.
Now take a look at Italy (figure 4) where there’s been a lot of talk of recession in the last month, guidance on economic growth is negative, GDP is weak as is business and consumer confidence.
Finally, where is France in all this considering there was much talk about France being in trouble up until a few months ago? Figure 5 shows it has been a pretty mixed bag for France over the last month. The main negative categories are the trade balance deficit, unemployment and producer price indices. On the flip side are economic growth events in general, plus higher exports, consumer spending and services PMIs.
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