Short-term economic overview (12 December 2012)

According to the OECD, the global recovery projected over the next two years is “hesitant and uneven”, with the Euro Area remaining in recession - or close - until well into 2013, with the USA recovering “sluggishly” and with the emerging countries decelerating because of the European crisis.

Spread between peripheral European countries and Germany has been reducing, also thanks to the agreement Euro Area-International Monetary Fund about Greece. Spread BTP-Bund plunged to 302 basis points on 4/12/12, but then it has increased again due to political uncertainty (339bp on 11/12/12); spread between Spanish Bonos and Bund is still over 410bp, while that between French bonds and Bund is around 70pb, although Moody’s downgraded France by cutting its AAA rating.

The €/$ exchange rate has been around 1.30 since the end of November (1.2993 on 11/12/12).

The prices of raw industrial materials started to increase again in November: +1% monthly according to Prometeia. Although rising tensions in Gaza Strip and the Middle East crisis, Oil Brent price remains around 110$ barrel.

In November inflation went down again in the Euro Area (to 2.2%) and in Italy (to 2.5%), while it increased to 1.8% in Milan, on historical low levels, though.

In October the unemployment rate grew to 11.7% in the Euro Area (new historical maximum) and to 7.9% in the USA (decreasing trend). The index was on the minimum level in Germany (5.4%), stable at 10.7% in France, rising to 11.1% in Italy and soaring to 26.2% in Spain.

In November the manufacturing confidence index¹ rose in the Euro Area to the level of July, recovering the drop registered between August and October. The index improved in all major economies of the Area: Germany, France, Italy and Spain. On the contrary, in October (last available data), the manufacturing confidence index went down in the Milan Area so that the recovery of the two previous months was almost zeroed out. The decrease was due to an increase of the stock of finished products and to a reduction of production expectations, while orders confirmed the negative balance of September.

According to Centro Studi Confindustria, Italy is “again in recession, for the sixth consecutive quarter”, but the context “is not all dark and there are some signals of stabilization”. “Uncertainty and lack of confidence” weigh on recovery and “the future is also obfuscated by the uncertainty about next elections”.

Italian manufacturing export has been showing positive performance in the latest months (+3.5% between January and September 2012), but less robust than in 2010 (+15.6%) and in 2011 (+11.4%). In the first nine months of 2012, trade with EU countries decreased slightly (-0.7%), while that with Extra-EU countries increased markedly (+9.1%). In particular, best performing countries were USA (+18.7%), Switzerland (+13.1%), Japan (+20.1%) and OPEC (+23.2%); whereas export fell with China (-12.2%) and India (-11%). At regional level, Lombardia (+3.7%), Toscana (+8.6%), Sicilia (+16.8%) and Emilia Romagna (+3.6%) contributed to 3/4 of the total Italian export growth. Between sectors, Oil (+18%), Pharmaceutical (+12.1%), Food and Metal products (both +7%) rose considerably, while Domestic Appliances (-3.9%) and Automotive (-0.5%) decelerated.

The total amount of authorized CIG² was substantially stable in November compared to October both in Italy (+5%) than in the Milan Area (-6%), where, in particular, CIG in Deroga plummeted (-28%). The comparison between November 2012 and November 2011 reveals a different trend: total CIG increased both at national level (+27%) and in the Milan Area (+19%). In the Milan Area the increase was due to the growth of both CIG Ordinaria (+30%) and CIG Straordinaria (+40%), whereas Cassa in Deroga decreased (-16%). The amount of CIG Ordinaria by Assolombarda firms descended by 7% in November compared to October, less than the total referred to all firms of the Milan Area (-17%).

Footnotes

1 Data referred to European countries are extracted from the monthly survey on manufacturing sector harmonized by the European Commission. Assolombarda carries out an analogous survey interviewing 350 associated companies every month. The manufacturing confidence index is the main indicator of these surveys and is calculated as the mathematical average of the seasonally adjusted data on production expectations, orders and stock of finished products (with inverted sign).

2 Cassa Integrazione Guadagni (CIG) is a particular Italian shock absorber. It is a redundancy fund which helps companies to keep labour force in times of economic difficulties. It allows workers to receive a part of their wages. There are three kinds of CIG: Ordinary (Cassa Integrazione Ordinaria - CIGO), Extraordinary (Cassa Integrazione Straordinaria - CIGS) and Special (Cassa Integrazione in Deroga - CIG in Deroga).

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