MUICP Estimate 2%

HICP inflation in the euro area is expected to be 2% in January 2013, down from 2.2% in Decmber 2012, according to a statistical estimate from Eurostat.

Energy is expected to have the highest rate at 3.9% compared with 5.2% in December, food, alcohol and tobacco follow with 3.2% the same as December, services are almost unchanged at 1.7% compared with 1.8% and non-energy industrial goods at 0.8% compared with 1% in December 2012.

Business And Consumers In Europe Still Confident

The Business Climate Indicator (BCI) for the euro area increased slightly in December by .05 to -1.12 due to positive assessments of production expectations and order books.

The Economic Sentiment Indicator (ESI) improved by 1.3 points to 87 from 85.7 in the euro area in December and remained more or less unchanged in the EU27 at 88.4 from 88.1. Economic sentiment in the euro area improved among consumers and in all sectors except retail trade. In the EU27 economic sentiment increased in industry and construction but these were partly offset by decreases in services and retail trade. Consumer confidence in thne EU remained unchanged.

Service Sector The Biggest Employer In Europe

The latest Labour Force Survey from Eurostat says that almost 70% of employed persons in the EU27 were employed in the service sector in 2011. The latest figure compares with 62% in 2000. Market services accounted for 39%, non-market services 30%, industry and construction 25% and agriculture 5%. Market services includes trade and transportation, financial services, administration and support services, professional and scientific services, accomodation and food services and non-market services include public administration, arts, entertainment and recreation, education and health.

Output GDP 0.1% Growth

The NIESR estimates that GDP grew by 0.1% in the three months to May 2012 after a 0.1% fall in April. The UK economy has also ceased to contract but remains weak. NIESR also say that negative output will get worse while the economy is stagnant but expect economic recovery to begin in 2013.

Industry decreased from 90.1 to 89.8 between April and May 2012, agriculture and construction remained stable at 78.7 and 91.2 respectively. Private services grew from 99 to 99.4, and public services from 105.7 to 105.8.

European Production Down In December

Industrial production fell by 0.1% in Europe in December in both the euro area and the EU27 compared with November 2010. When December 2010 is compared with December 2009 industrial production increased by 8% in the euro area and 7.7% in the EU27. The average production index increased by 7.1% in the euro area and 6.7% in ther EU27 over the same period.

Looking at the main industrial production sectors in the monthly comparison energy grew by 2.4% in the euro area and 1.7% in EU27. Non-durables fell by 0.3% in the euro area and 0.2% in EU27 and durables decreased by 1% and 0.1% respectively. Intermediate goods fell by 1.3% in both areas. The annual comparison shows that capital goods grew by 14.8% in the euro area and 14.5% in the EU27 while intermediate goods grew by 7.8% and 7.9% respectively. Energy increased by 5.8% in the euro area and 3.8% in EU27. Non-durables grew by 1.9% in the euro area and 2.5% in EU27 and durables by 2.1% and 1.8% respectively.

2.1% Rise In Euro Labour Costs

Euro area hourly labour costs rose by 2.1% in the year to Q1 2010. In the EU27 the rise was 2.2%. Wages and salaries per hour grew by 2% and the non-wage component by 2.1%. In the EU27 wages and salaries rose by 2.3% and the non-wage component by 1.9%. Statistics from Eurostat Labour Cost Index (LCI) euroindicators.

In the euro area, labour costs per hour in industry increase was 1.8%, in construction 2.1% and in services 2.2% in the year to Q1 2010. In the EU27 labour costs per hour grew by 1.8% in industry, 1.4% in construction and 2.5% in services.

The highest annual increases were in Bulgaria (10.5%) and Romania (7.4%). The highest decreases were in Lithuania (-11%), Latvia (-7.2%), Estonia (5.5%) and the Czech Republic (-3.1%).

Increase In European Industrial PPI In March

The monthly industrial producer price index for the euro area went up 0.6% and the EU27 0.7% in March 2010 compared with February 2010. Price rises in the energy sector increased by 1.7% i the euro area and 1.6% in the EU27. Durable consumer goods also rose by 0.1% in the euro area and 0.3% in the EU27. Capital goods were unchanged in the euro area but increased by 0.2% in the EU27. Non-durables fell by 0.1% and remained stable respectively.

The index went up by 0.9% in the euro area and 1.7% in the EU27 in March 2010 compared with March 2009. The total industry index excluding energy 0.1% in the euro area and 0.3% in the EU27. The prices index in the energy sector rose by 2.8% and 5.12% respectively. Intermediate goods rose by 0.8% in both zones. Durables increased by 0.3% in the euro area and 0.5% in the EU27. Non-durables fell by 0.5% and 0.2% respectively. Capital goods fell by 0.5% in the euro area and 0.1% in the EU27.

Positive Indicators In Services

The index of services from the ONS reported a positive index number for the first time since October 2008. The total service industries indicator increased by 0.1% year-on-year in February 2010 after a fall of 1.2% in January. The monthly indicator also increased by 0.6% on January 2010.

Three of the five components that make up the index reported positive indicators. Distribution increased 3.7% mainly due to the increase retail of 5.4%, transport, storage and communication 0.6% partly due to transport services, and Government and other services 0.1% due to health and social work increasing 2.4% but being partly offset by a fall in recreation of 5.5%. The other two components, hotels and restaurants and business services and finance, both recorded decreases of 0.9% and 1% respectively. The main factor in the decrease in the indicator for hotels and restaurants was pubs and clubs. The business services and finance sector decrease was mainly down to banks with a decrease of 6.8%.

Productivity Down By 1.4%

Whole economy output/worker productivity decreased by 1.4% Q4 2009 compared with same period last year from a fall of 3.3% on the previous quarter. Quarter-on-quarter output/worker productivity increased 0.5% up from 0.2% in the previous quarter. Output fell by 2.8% in the quarter from a fall of 4.9% in the previous quarter. Another measure of productivity looks at it in terms of output per hour worked. Using this measure, productivity fell by 0.3% in Q4 2009 compared with last year. Total hours worked fell by 2.5% on last year. Comparing the sectors shows that manufacturing output/hour increased by 3.9% and services decreased by 1.2%.

In the service industries output/job fell by 2% in Q4 2009 compared with the previous year. The fall in the previous quarter was 3.4%. Output/hour deceased by 1.2% from 2.3% in the previous quarter. Business services and finance output/job fell 3.9% and output/hour fell 3%. Manufacturing output/job productivity increased by 2.8% and output/hour increased by 3.9% on the same quarter last year. Unit wage costs were up 2.4% on last year's 4.2%. In agriculture, forestry and fisheries, slow growth sectors, output/job fell by 7.4% and output/hour by 13.5%. Manufacturing unit wage costs increased by 0.4%.

Across the regions in 2008, productivity measures show GVA per job to be highest in London at 140.9 (national average = 100) and lowest in Wales and Northern Ireland at 84. Scotland was 95.4. In England, the average was 101.8, the lowest were the North West and Yorkshire and the Humber at 87.4. The GVA per hour measure shows London the highest at 132.7 and Northern Ireland the lowest at 81.4. Wales reported 86.4 and Scotland 96.3. In England, the average was 101.7 but the lowest was the North West at 87.9. GVA per head was highest in London with 170.6, and lowest was Wales with 74. Northern Ireland reported 78.7 and Scotland 97.5. In England the lowest was the North East with 77. The average for England was 102.5.

Biggest Fall Ever In Natural Resource Use

The UK economy used 613m tonnes of natural resources between 2007 and 2008 according to ONS environmental accounts published last week. Domestic material consumption fell by a record 67m tonnes during the period. Resource use had remained more or less unchanged for 10 years. The fall reflects decreases in the domestic extraction industry mainly regarding primary aggregates like crushed stone, sand and gravel.

Direct material input (DMI) which is the sum of domestic and imported primary resources totalled 781m tonnes of which domestic production accounted for 502m tonnes, down 9.9%, and imports 278m tonnes, down 5.1%. Total material requirement (TMR) fell between 2007 and 2008 by 6.3% to 1,974m tonnes.

Environmental taxes, which can be divided into energy, transport, pollution and resources, amounted to £38.5bn in 2008, an increase of £0.6bn on 2007 and 2.7% of GDP in 2008. Households are paying over half the environmental taxes at 55.1% which amounted to £20.9bn, followed by transport and communication at 15.8% or £5.98bn, the wholesale and retail trade at 6.8% or £2.6bn and manufacturing at 4.9% or £1.9bn. The construction industry is growing in its contributions to environmental taxes.

Industries spent a total of 4.6bn on environmental protection in 2007. The chemicals industry spent £655m, the food industry 457m and the energy production and water industries spent 1.8bn on environmental protection in 2007 mainly on waste management, other abatement activities and air and climate protection.

Modest Rise In National Minimum Wage Welcomed

The small increase of 1.2% in the national minimum wage was welcomed by the trades unions. It was a relief more than anything else as there had been pressure from parts of business to freeze it. The Low Pay Commission announced the NMW will increase by 7 pence to £5.80 per hour from October 2009. The increase for younger people aged 18-21 will be 6 pence to £4.83 and for 16-17 year olds the minimum will rise 4 pence to £3.57. It was also welcomed by the British Retail Consortium and the CBI who said the moderate increase was right to protect jobs in these difficult times. The BRC had suggested to the Low Pay Commission that any increase should not be above 1.5%. They also suggested it might increase job opportunities.

Low Production Figures But Non-Durables Up

The index of production for the first quarter saw a 5.3% decrease quarter on quarter and 12.1% decrease on the first quarter of 2008. Manufacturing was 5.5% lower and electricity, gas and water decreased 3.5% on the previous quarter. Manufacturing also showed the lowest rate of decline for 13 consecutive months with a 0.1% decrease between February and March. The March index was 88.0.

In the main industrial groups output of durable goods fell 8.0% on previous quarter, consumer non-durable goods went up 0.3% on February, capital itmes were 8.9% lower and intermediate goods and energy 6.6% lower than last quarter. Other significant falls included machinery and equipment.