Here is some evidence of a broadening European economic recovery

John Robertson


Here is some evidence of a broadening European economic recovery. Last week's December quarter GDP statistics were described as better than expected but they showed regional output growth stuck at an annualised rate little better than 1%. Despite seven consecutive quarters of GDP growth, there is little sign of an acceleration. From a resources sector standpoint, an acceleration would be necessary to speed up the rebalancing of global commodity markets. One sign of a broadening recovery can be gleaned from the European monthly industrial production statistics. The chart recasts the national statistics into a diffusion format. The blue bars show the difference between the proportion of European countries reporting an increase in output from a year earlier and the proportion reporting a decrease. The statistic does not necessarily say anything about the rate of growth but the broader the base of recovery - which is better now than for several years - the greater the chance of a sustainable expansion with potential on the upside.

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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...


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