While unemployment in Spain is still unbelievably high as you saw in the previous post, things are getting better in Europe
This article is a good example of how you take a pulse of the economy.
1. Retail sales have been increasing (0.7% this month, 0.5% last month)
Consumption is, in most countries, more than 50% of the GDP. When consumers are buying, the economy is growing.
But you have to be careful because, as the article mentions, an unknown part of the increase in consumption was because sales in Portugal and Spain increased a lot, perhaps due to tourism sector rebounding.
Note: the numbers just published are for August. Information comes with a delay. In this case the delay is very short - just a month.
2. Survey of economic activity.
Purchasing manager index - a survey of firms - is above 50. This means that more than half of the managers reported that conditions are better than in the previous month. Purchasing managers are asked about output, new orders, employment and other issues. The answers are coded as: 1 - things are improving; 0.5 - no change, 0 - things are getting worse. The calculated value is a weighted index of answers.
Three things to note:
- purchasing managers are the first to know
- they are asked non-specific questions, so the are likely to answer. No trade secrets are revealed
- the questions are about fact, not opinions
3. Number of unemployed has been falling, third month in a row
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