Short-term economic overview (13 June 2013)

The “ranking of the global growth” is confirmed: emerging countries in the lead, USA recovering, Europe decreasing and Italy at the bottom of the major European countries. According to the ECB “overall, euro area economic activity should stabilize and recover in the course of the year, albeit at a subdued pace”.

European labour market is still fragile: unemployment rate grew to 12.2% in April. The ECB has forecasted “a new rise in unemployment in the short term”. The unemployment rate rose also in Spain (26.8%) and Italy (12.0%), it was stable in Germany (5,4%) and France (11.0%), while it decreased in the USA (7.5%).

The European Commission closed the excessive deficit procedure against Italy started in 2009, thanks to the good results of public finance in 2012: Italy is one of the six European countries with a deficit to GDP ratio under 3% (but we remain one of the less virtuous countries in terms of debt to GDP ratio, over 100%).

The $/€ exchange rate has been slightly increasing in the last three weeks: 1.3277 on June 12th 2013.

In May inflation grew a little in the Euro Area, to 1.4% from 1.2% of April (although on modest levels), while it was unvaried in Italy (1.1%) and Milan (1.2%).

The manufacturing confidence index¹ increased slightly in May in the Euro Area, stopping the decrease of March-April. In detail, the index recovered a little also in Italy and more in France and Spain, while it continued to go down in Germany (where it decreased for the third consecutive month). In the area of Milan, the manufacturing confidence index grew in April 2013 for the second consecutive month, mainly due to increase in demand. It’s remarkable that foreign demand reached the level of April 2008, before the crisis. However, entrepreneurs kept being prudent relative to these positive signals: inventories of finished products, already under normal levels, continued to descend and production expectations on short term levelled off compared to March.

In 2012 Lombardy showed an economic slowdown less intense than in the Italian average (GDP -2.0% vs -2.4%) thanks to exports that contributed positively, although weakly. The recession affected in particular industry, while services kept recovering the levels of activity before crisis. Weakness has been proceeding also in the first part of 2013 and firms investments have shown difficulties to restart.

2012 was a difficult year also relative to turnovers of firms of the area of Milan; contracting for half of the firms, but increasing for 25% of them. Expectations for 2013 are uneven: 1/3 has forecasted a decreasing turnover; 1/4 increasing and 41% stationary.

In order to face the crisis, firms of the area of Milan pay now more attention, compared to the beginning of 2008, to finance and to management/reorganization of employees, while there’s a minor focus on brand. Moreover, our firms show a higher presence on foreign markets and a stronger use of alliances, mergers and networks.

In the first quarter of 2013 export decreased in Lombardy as well as in Italy as a whole (-0.6% and -0.7%), while it increased (+0.4%) in the area of Milan thanks to the growth towards Extra-Ue countries (+5.1%) and that of food (+5.9%), fashion (+7.0%) and other manufacturing activities (+7.0%).

Latest available data of INPS about CIG² are relative to April 2013, when the total amount of authorized hours was stable in the area of Milan compared to March 2103 and increasing over April 2012 (+44% mainly because of an higher use of CIG Straordinaria, just partially compensated by the reduction of CIG in Deroga). The first data relative to May 2013 and about CIG Ordinaria hours of Assolombarda companies show a fall by 30% as compared with April 2013 and by 27% as compared with May 2012.

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).

Contact us

For further information please contact the Research Department tel. +390258370.409, e-mail stud@assolombarda.it.