European Daily Catch: Unemployment and Retail
Global labor reports prevailed today, but the US employment report took center stage. I’ll not comment on that report, so as to keep with my generally all things European theme here at The Wilder View. However, a quick sift through my feed reveals rather cynical takes: see Dean Baker’s comments here and here; Spencer’s take here; Jake’s eye candy here; and Ed Dolan’s more positive tone here.
In this post, I present a new series: European Daily Catch (EDC). In this series, I’ll illustrate a selection of the day’s European economic data releases that I find particularly interesting. We’ll start with two complimentary reports: the labor market and retail sales.
Bottom line: the divergence is at extreme levels. I expect 2012 to be the year of convergence rather than divergence. Something’s gotta give.
EDC 1. The variance in labour performance further widens in November. Unemployment rates across the EA 12 (excludes the new countries Slovenia, Slovakia, Malta, Cyprus, and Estonia) show 5 countries making new cyclical highs. Ireland, Greece, and Spain all mark unemployment rates that are 130% or more above their cyclical lows. Note the Netherlands is not consistent with core performance – while the unemployment rate is low, 4.9%, it continues to rise. The Netherlands is the first sign of convergence; more will come.
(Note: all data in this chart is for the month of November, except Greece which is current as of September.)
EDC 2. Next up is real and working-day adjusted retail sales. True, retail sales do not describe consumption patterns sufficiently well for some countries listed: the correlation between real retail sales and real consumption in Germany and France is 34% and 61%, respectively. However, for other countries, like Spain, the correlation is near 1, 92.5%.
The way that I read the illustration below is this: German and French real retail sales are stable to rising; that probably characterizes the best possible outcome for domestic consumer demand (just look at domestic orders for consumer manufactured goods in Germany– sorry not included here – or the French unemployment rate). In contrast, we know that domestic demand is falling precipitously in the 3rd and 4th largest EA countries, Italy and Spain. All else equal, core retail sales are likely to slip in 2012.
In both charts, I added the US performance for cross-regional comparison. The US performance provides positive contrast to the domestic catastrophe that fiscal austerity without growth brings.
Source data: There are too many sources to link to here. I used seasonal-adjusting techniques and multiple data sources. If, however, you would like to access this data, I’ll be happy to send it along. Just send me an Email request.
One Response to “European Daily Catch: Unemployment and Retail”
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