The new year hasn't given Europe much to celebrate yet. Recently released industrial and employment data shows the ongoing drag that austerity and recession prevention measures are having on the economy here.
Industrial production across the euro zone fell for the third straight month in November, according to Eurostat. Output slipped 0.3 percent from October and 3.7 percent from November 2011. The consensus forecast had called for 0.1 percent growth.
The year-over-year slide was the biggest since November 2009. And most indicators from the last three months of the year seem to point to a third consecutive quarter of general contraction for the 17-country bloc.
News reports have attributed the decline to across-the-board weakness and steep drops in the production of intermediate and capital goods. But a rising unemployment rate isn't helping matters. The euro zone's seasonally adjusted unemployment rate for November rose 0.1 percentage points from October and 1.2 percentage points from November 2011 to 11.8 percent, according to Eurostat. For comparison's sake, the US unemployment rate for November was 7.8 percent.
There was a dim positive note for the electronics industry. Industrial output in Germany, a hub for the high-tech and auto sectors, rose a modest 0.1 percent in November, Eurostat said. The country also had one of the lowest unemployment rates in the EU (5.4 percent).
I don't know about you, but this kind of news keeps turning my stomach, especially as someone based in Europe. It's like the recession will never end here, and there's really no end in sight.
What does this mean for the electronics supply chain? We'll know more about how individual companies fared when earnings are announced in the next few weeks, but I'm not expecting stellar overall results. As we’ve reported before, many of the high-tech bellwethers have been struggling the last few quarters, bumping along slowly toward recovery or moving forward with significant shakeups.
If I had to put money down, I'd bet we'll hear companies — especially those dependent on consumer holiday sales — say revenue conservatively inched up in the last quarter of 2012, though new orders in Europe were slow. Anything other than that would surprise me.
What will be more interesting is how companies and executives respond to Europe's ongoing economic slump. We all know it's an important and mature market, but what measures will executives announce now that it looks like the EU will report three consecutive quarters of economic contraction? How will they help turn these numbers around?