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ECONOMIC DATA THIS WEEK

European GDP, 2nd Quarter 2019:  The preliminary flash estimate of European GDP from Eurostat shows growth of +0.2% compared to the 1st quarter for both the Euro-zone and the EU28.  This is about half the pace of growth at the start of 2019 and, in the case of the EU28, is the slowest since 2012 and matches the slow growth that was seen in the Euro-zone in the 2nd half of 2018.

As a result, the annualised rate of growth slowed to +1.1% in the Euro-zone and +1.3% in the EU28.  Again, these represent a slowdown compared to the rates in the previous quarter although, inevitably, not a dramatic as the single quarter data above.

There is no country detail in this release - that will come in the estimate that will be published on 14th August.  You can download the Eurostat News Release from their web-site at www. http://ec.europa.eu/eurostat (31 July) or request it from MTA.

European Commission Economic Sentiment Indicator and Capacity Utilisation, July 2019:  The European Commission (EC) draws from a range of surveys to construct its Economic Sentiment Indicator (ESI).  This has been on a steady decline since peaking at the start of 2018 and the July measure showed another modest reduction with the Euro-zone figure falling a little more than that for the EU28.

The overall ESI is made up of confidence indicators in the various sectors across the economy;  there was a marked fall in industrial confidence, although not by as much as for either construction of financial services.  The decline for the industry sector was because the respondents had more pessimistic view of both production expectations and the current level of orders books, although their assessment of the stocks of finished products improved.  Although not included in the measure of confidence, there was also a sharp fall in the assessment of past production and export order books.

This was one of the quarterly surveys that covers additional indicators including the figures for capacity utilisation.  In both the Euro-zone and EU28 there was a 2nd successive significant fall in the manufacturing capacity utilisation rates, although they both remain above their long-run averages.

This is not, however, the case for all countries;  the UK also saw a fall in its capacity utilisation rate and, at 78.8, it is below the long-run average and at its lowest since the 3rd quarter of 2013.  Among the major manufacturing industries, Germany and France also saw a sharp fall in capacity utilisation in the latest data;  there was a smaller fall in Italy and Spain managed a small improvement.

You can download the EC report from their web-site at https://ec.europa.eu/info/business-economy-euro/indicators-statistics/economic-databases/business-and-consumer-surveys/download-business-and-consumer-survey-data/press-releases_en or you can request it from MTA.

BEAMA Contract Price Adjustment Service:  Do you have long-term contracts, either with customers or suppliers?  Have you thought about incorporating something in the contract that allows you to adjust the price according to changes in input costs?

On behalf of members, MTA subscribe to a service provided by our colleagues at BEAMA which gives a monthly track of key indices on labour and materials costs.  Of course, you need to get the principle and the relevant formulas included in the contract, but this gives you a way of updating the relevant prices independently.

If you would like more details on this, please contact Geoff Noon (gnoon@mta.org.uk) at MTA;  we can send you a copy of the latest report and some typical formulae and can have a discussion about whether or not this would be useful for you.