Green Shoots in Europe

They might be small and they might be shy, but the green shoots are definitely there. In April, The Conference Board announced that eight major economic indicators in the eurozone experienced their highest monthly increases for nearly 20 years. In the same month, Jones Lang LaSalle report that consumer confidence in Europe rose after almost two years of decline.

The Conference Board measures these economic indicators in its Leading Economic Index (LEI). The LEI increased by 1.8% in April, the largest amount since June 1990 and furthermore, all eight components of the LEI made positive contributions. When they released the LEI on 28th May, The Conference Board stated that the eurozone is "showing substantial improvement." According to Jean-Claude Manini, Senior Economist for Europe, "the LEI shows that the bottoming process may be getting under way."

The LEI for the eurozone looks at eight components, all leading indicators. These include interest rate spread, stock price index, the business expectations index, real money supply and residential building permits. All eight were positive in the LEI for April. The Conference Board Coincident Economic Index (CEI) for the eurozone remained unchanged in April after declining for the previous seven months. The CEI measures current economic activity including retail trade, industrial production and manufacturing turnover, which all increased while other indicators such as employment fell.

The Jones Lang LaSalle ‘European Retail Overview May 2009' reports that consumer and retail confidence have risen in Europe in recent months. The company notes that consumer confidence increased particularly in the UK, Spain and the Czech Republic. The Overview claims that "consumer sentiment appears to have turned the corner" and forecasts modest recovery for 2010.

"While the general consensus is that it's too early to say an economic recovery is on the way for sure, these two reports are definitely good news," comments James Gonzalez, Market Analyst for Obelisk Investment Property. "They measure different things, but both show very positive signs, which are more than welcome after so many months of negative data."

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