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Eurozone Current Account Falls Further

James Boston
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Eurozone Current Account Falls Further

The Eurozone’s Current Account is showing some unsurprising softness according to the latest figures just published for the month of August. On a seasonally adjusted basis the surplus has slipped to €18.9Bn from a revised July number of €21.6Bn. The larger slippage has come in the non seasonally adjusted figure which is showing at €15.1Bn from a revised July reading of €32.8Bn. The recent weakening of the Euro is apparently doing little to offset the deteriorating trade balances of the single currency nations and whereas consumer spending is holding up for now there is very evident weakness in some key sectors of the major Eurozone economies. The most notable aspect of today’s figures was the sharp fall in trade in the Services sector, this has dropped to just €7.8Bn from a July number of €13.5Bn. Despite obvious weakening signals in the manufacturing sector there was little impact on the August Current Account as a result.

Industrial Sales in Italy, for example posted a welcome gain in August, the month on month number reversed a July fall of -1.1% to produce an increase of 0.4% on the month. It was the same situation fro the Industrial Orders number which turned a July contraction of -1.5% into a month on month gain of 1.5% in August. Both of these indicators have been seasonally adjusted and given the fact that much of the Italian industrial sector traditionally shuts down for this summer month it is difficult to attach a high level of confidence to this data.

A positive month is undoubtedly welcome, however these numbers do need to be viewed in the context of the overall trend. The year on year versions of these Industrial indicators have not undergone seasonal adjustment and do not make for encouraging reading. The Orders figure has fallen substantially to -3.2% from -0.7% while the Sales number is down to -2.3% from a previous reading of -1.3%.

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