August, thankfully, is as slow a month as it
gets. Hence not many people will be reading my posts (not that they do anyway).
So, the brave souls who defy the boredom that my blogging causes to most people,
will be treated with another manufacturing-related post.
For most countries and sectors, late 2007 –
early 2008 was the peak of activity before the Great Recession set in. Hence I
find it quite interesting to take a look at where does manufacturing production
and employment for Euro Area countries stand today compared to early 2008.
In the current post I have included some
randomly (or maybe not so randomly) selected Euro Area countries which I have
divided into three separate groups: periphery, core and countries whose production
currently is at a higher level than that of early-2008.
As far as data are concerned I used monthly
data for production volume despite the “noise” they contain (I know all these
fluctuations in charts are visually unappealing). The reason for that was that
I wanted to have as recent a picture as possible (and Q2 data were not
available) so please forgive me for that choice. Coming to employment, I used
quarterly data, since monthly were not available. And that is it, let the
charts roll.
First let’s take a look at peripheral countries.
 |
| source: Eurostat, own calculations |
Greece and Spain have fared equally bad these
past 51/2 years with the production’s trajectory being different
though. Greece’s manufacturing sector, being more inward-looking, proved
relatively more resilient in the 2008 crush but found it more difficult to form
a base in the coming months for the exact same reason.
Out of the four southern countries, the Portuguese
manufacturing sector performed relatively better.
Coming to the core countries (where for some
reason I have included France as well) we can see that Finland’s
underperformance is striking.
 |
| source: Eurostat, own calculations |
When it comes to underperformance, France is a close
2nd. What is noteworthy is the fact that the Finnish, German and
French manufacturing sectors were the hardest hit in the 2008 debacle, with the
German manufacturing recovery standing out.
There is a small group of countries where
production currently stands at a level higher than that of early-2008, namely,
Belgium, Ireland and Slovakia.
 |
| source: Eurostat, own calculations |
Production-wise, the Irish manufacturing sector
proved to be the most resilient among those pictured, if we judge by the
magnitude of the 2008 dip. Slovakia’s production plummeted deeply and abruptly
to recover swiftly (in line with Germany) afterwards.
Now let us have a look at how manufacturing employment
fared.
 |
| source: Eurostat, own calculations |
As expected, Greek manufacturing has shed the
most jobs, followed by Spain and Italy is the most resilient of the bunch.
 |
| source: Eurostat, own calculations |
Moving over to the core now, employment in
Germany has recovered almost to the pre-crisis levels. On the other hand, in Netherlands,
although production is almost at the early 2008 levels, employment is far
softer.
Finally let’s see how employment is behaving
the best-performers group. Unfortunately,
data for Belgium are not available.
What could perhaps come as a surprise to some
is that employment in both Ireland and Slovakia is significantly below the
early 2008 level.
 |
| source: Eurostat, own calculations |
To wrap things up, even core countries could be
divided into soft-core and hard-core (if you will allow me to coin them that),
with the hard-core group’s ranks thinning. Performance in Austria and Germany is
relatively good, both production-wise and employment-wise, while Finland and
France have not fared that well. Netherlands is doing ok as far as production
is concerned but definitely worse if one looks at employment. The picture for
peripheral countries is outright miserable and what one should realistically
hope and anticipate is the moment when production and employment will bottom.
Production in Greece appears to be forming a base but employment does not, nor
does in any other of the peripherals. The “shocker” (insert irony here) is that
employment is weak even in the few countries where production currently is at
higher levels than 2008. All in all, there’s not much hope for employment in
the tradables either…
P.S. If someone thinks that the reason for employment’s
behavior in seemingly better-performing countries is a masked fall in turnover,
think again, turnover sits higher than early-2008 as well.
