All posts by Gemma

Europe’s economic fractures widen in February

By Andy Bruce

LONDON | Tue Mar 5, 2013 11:46am GMT (Reuters) –

France, Spain and Italy dragged the euro zone into a deeper downturn in February, according to business surveys that showed the chasm between these countries and prosperous Germany widening yet again.

While British services companies had a slightly better month than expected, Tuesday’s purchasing managers’ indexes (PMIs) showed deepening fractures running through the European economy.

The divide Between Germany and France, the euro zone’s two biggest economies, grew to its widest since the currency union’s inception in 1999.

The PMIs reflected how euro zone businesses were faring mostly before the inconclusive outcome of Italy’s general election, which unsettled international financial markets.

“Two months into 2013, we’ve been somewhat disappointed with the Eurozone’s economy’s progress. The PMIs again reaffirm that,” said Victoria Clarke, economist at Investec in London.

“Germany’s doing a bit better than the rest of the pack, but in general, there’s no real sign there of stabilisation, or of the contraction at least bottoming out.”

Markit’s Eurozone Composite PMI, a broad gauge of activity at thousands of companies across the 17-nation bloc, fell to 47.9 in February from 48.6 in January. Although that was a little better than a preliminary reading of 47.3, it was still well below the 50 mark dividing growth from contraction – as the index has been for just over a year.

Euro zone retail sales for January, showing a 1.2 percent rise, were much better than expected, although economists cautioned that the underlying picture was still very weak.

British retail sales also grew at their strongest annual rate in almost two years last month.

The euro rose slightly against the dollar in response to the data. European stock markets also rallied on Tuesday, although led by strong bank results.

Britain’s services PMI, which accounts for the bulk of its economy, hit a five month-high of 51.8 last month from 51.5 in January, beating the median forecast of 51.0 in a Reuters poll.

Economists expect comparable data from the United States will show its non-manufacturing economy maintained a moderate rate of growth, slowing only slightly since January.

Growth among Chinese services companies, which comprise a smaller proportion of its economy compared with Western peers, slowed from a four-month high in February.


For the euro zone, the outlook depends largely on whether Germany can keep up its economic growth and offset struggling France, Italy and Spain, according to Chris Williamson, chief economist at PMI compiler Markit. “(That) seems a tall order, meaning hopes of a return to growth for the region by mid-2013 are now looking too optimistic,” he said.

Williamson said the latest surveys were consistent with the euro zone economy shrinking around 0.2 percent this quarter, with only German strength saving the bloc from a downturn as bad as the 0.6 percent decline at the end of last year.

The European Central Bank meets to decide monetary policy this week, although few economists expect any major announcements this month.

Whether the Bank of England will act this month to help boost the economy is a tougher call, despite Tuesday’s unexpectedly strong services PMI.

Before the data, economists polled by Reuters put a 40 percent median chance on the Bank of England adding to the 375 billion pounds it has spent so far on its asset purchasing programme.

However, the upbeat services number follows dire construction and manufacturing PMIs from the last few days. “Maybe a small glimmer of hope is showing through for the UK services sector amidst deepening gloom for the UK economy,” said David Brown from New View Economics.

He said it was far too tenuous to suggest the services PMI means there was some uplift in economic activity this quarter, taken together with the poor manufacturing data.

(Graphic by Vincent Flasseur. Editing by Jeremy Gaunt)

Greece: The Russians are coming.

There is  little doubt that the Eurozone has been so inward-looking over the last few years that the big-picture has eluded it.

Two years ago, I wrote about possible Chinese interest in Greece but it would seem that I was wrong. It is the Russians who appear to be first in the queue.

This is what the Vice President of the Russian Chamber has to say about the Eurocrisis: “This has not been a crisis of the Greek economy but of the European Union and Greece has been chosen as its victim”.

There is massive interest among Russian business people about opportunities in Greece.

In the next few weeks, Russia will be the first country in which Greece’s Investment Bill is presented – after it has been debated in the Greek Parliament.

Unlike Greece’s Euro “partners”, the Russians are showing great interest and confidence in the Greek economy and the Greek people.

The Greek Development Ministry’s General Secretary Tsokas and Simon Kedikoglou (a government spokesman) have already had discussions in Moscow about cooperation with Russian investors. Greek agriculture, tourism, alternative energy sources, pharmaceuticals and even holiday homes for the Russian middle classes were on the agenda.

Whereas Greece’s European ” friends’ ” main focus has been on maintaining the Greek banking system and the “intangibles”, it would seem that there are others who are willing to do what should have been done by Europe in the first place – they’re investing in the Greek economy.

Management: Two views

As an Executive Coach of over 25 years, there is one pet hate which I have developed – the Management Model.

Every year, new models arrive and new training methods  sprout like weeds.

99% of them are derivative.

For instance, when applying a bit of pseudo-psychology, a classic Johari Window may be used. This one which is based on the Merrill-Reid Social Styles Model. Here it is:

So, we coaches and trainers tell our charges that as managers, they are either Driver-Expressive, Driver-Analytical etc. We know that accountants are Analytical-Aimiable or that a Finance Director might be a Driver-Analytical.

Then we all nod wisely and have a discussion.

But so what?

It’s no more than Mystic Meg telling you that you are “emotional” but “you like to get your own way” or that “you never give up” or ” you have a small scar on your left knee”……I can even sense you nodding as you read this!

Unfortunately, if you have staff and you are a bad manager, this is the Management Model against which they are likely to be judging you:

So, if you are a manager or an “executive”………think on……….ditch the “Bossmanship” and self-importance. Someone , somewhere may be ridiculing you.

….and oh yes……………….ditch those Management Models as well as those “soft” skills of Management.

You already have those.

(RR posted by Gemma)