European Economy

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Manufacturing data was out in Europe overnight with again some upside: Final Eurozone Manufacturing PMI at 48.3 in May (flash:47.8) Downturns ease in all nations covered Price deflationary pressures remain, as input costs and output prices fall further The eurozone manufacturing downturn eased for the first time in four months in May.

Another month goes by and once again unemployment in the Eurozone targets the moon: The euro area (EA17) seasonally-adjusted unemployment rate was 12.2% in April 2013, up from 12.1% in March.

As I noted yesterday, the chatter about Europe changing course on ‘austerity’ is growing, although as I stated although this appears to be positive step forward, I really think we need to wait until after September to get a handle on exactly what that means.

Back in December 2011 I stated that I thought the Eurozone had about 2 years of worsening economic data ahead of it before the situation became so bad that the zone would be forced to back away from the fiscal treaties they had just signed themselves up to.

I noted back in January that the IMF had started to do its own “lessons learned” on its European financial crisis response and had begun to admit it had made some fairly terrible mistakes in its assessment of the debt sustainability of a number of nations, including Greece, under its current programs.

Not that it should be a surprise to most MB readers, but the economic data coming out of nations within the Eurozone is once again “worse than expected”.

Back in November 2012 Mario Draghi had this to say when asked when the Eurozone would begin to emerge from the economic crisis that had been on-going for almost 3 years at that time.

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As I mentioned earlier in the week Italy may have a new parliament but there is very familiar person who appears to be pulling the strings, and how long such an arrangement can last is questionable.

Another day, another round of atrocious data out of the Eurozone: Spain’s unemployment rate soared to a new record of 27.2% of the workforce in the first quarter of 2013, according to official figures.

There was a hint from yesterday’s China PMI that the good news from global trade was looking very toppy.

Firstly to Italy where there is still no outcome of the election.

The Cypriot drama is beginning to wane, but if you read the MoU you’ll understand that this story is far from over: The economic adjustment programme will address short- and medium-term financial, fiscal and structural challenges facing Cyprus.

Just a quick note to start.

So as I reported yesterday afternoon Cyprus has agreed on the pre-requisite for a €10bn Troika initiated bailout.

Europe has released details of its new deal with Cyprus: The Eurogroup has reached an agreement with the Cypriot authorities on the key elements necessary for a future macroeconomic adjustment programme.

The Cyprus saga continues and, as I type, there is still no resolution in sight.

The Cyprus show continued overnight with on going talks with Russia: Cyprus and Russia are discussing cooperation in the banking and energy sectors in addition to a loan, and any deal to solve the island’s debt crisis should also be in Moscow’s interests, the Cypriot finance minister said on Thursday.

So the Cypriot parliament voted firmly against the Eurozone/IMF rescue package with the incumbent party abstaining and the Opposition voting against it.