The U.S. Drops in Global Competitiveness
The United States has slipped down the rankings of the World Economic Forum's "The Global Competitiveness Report 2012-2013″ from fifth place last year to seventh. Political deadlock and problems with the deficit were among the issues that dragged on the U.S. rating. Describing the evaluation, the WEF states:
We define competitiveness as the set of institutions,policies, and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be earned by an economy. The productivity level also determines the rates of return obtained by investments in an economy, which in turn are the fundamental drivers of its growth rates.
Switzerland, Singapore, Finland, Sweden, The Netherlands and Germany rate ahead of the United States. It is worth noting that not only do the nations have strong, open economies. They also have homogeneous populations. At the bottom of the list are Mozambique, Chad, Yemen, Guinea, Haiti, Sierra Leone and Burundi.
Push for a Greek Six-Day Work Week
The Guardian reports that the next bailout of Greece may require residents to work six days a week. That is unlikely to go down well with Greeks and likely will cause more unrest and riots. Those actions will lower productivity, which in turn will undermine gross domestic product. The paper reports:
Greece's eurozone creditors are demanding that the government in Athens introduce a six-day working week as part of the stiff terms for the country's second bailout.
The demand is contained in a leaked letter from the "troika" of the country's lenders, the European commission, European Central Bank, and International Monetary Fund. In the letter, the officials policing Greece's compliance with the austerity package imposed in return for the bailout insist on radical labour market reforms, from minimum wages to overtime limits to flexible working hours, that are likely to worsen the standoff between the government and organised labour in Greece.
How hard Greeks will work each of those days is an open question.
Eurozone Economic Activity Falls
Research firm Markit put out its final PMI data for August. Among the eurozone nations, the figures were worse than flash data given earlier. Both the preliminary and final data show a picture of a region in which most nations are in recession and large nations such as Germany and France are close.
Markit analysts write:
Eurozone economic output contracted for the seventh successive month in August. At 46.3, down slightly from 46.5 in July, the Markit Eurozone PMI Composite Output Index came in below its earlier flash estimate of 46.6. The average index reading so far in Q3 2012 (46.4), is in line with that registered for the second quarter as a whole.
The downturn in output was again steeper in the manufacturing sector. Although the rate of contraction in manufacturing production eased to a two-month low, it was still one of the steepest registered since the end of the previous recession in 2009. Service sector business activity fell for the seventh straight month, and at a slighty faster pace than in July.
August data signalled a widespread contraction of economic activity across almost all of the nations covered by the survey. The steepest rates of decline were still registered in Spain and Italy, while the modest downturns in Germany and France also continued. Brighter news was signalled for Ireland, with output rising for the third month in a row and at a slightly faster pace than during July.
Rob Dobson, Senior Economist at Markit said: "The final August PMI came in only slightly below its earlier flash estimate, leaving the Eurozone economy on course to fall back into technical recession in the third quarter. Sharp declines in new orders at manufacturers and service providers, plus further job losses, mean that there is little prospect of a sustained improvement in economic conditions over the near-term.
"Some heart can be taken from the recent recovery in Ireland, which is providing hope to others that a return to growth is possible, and further evidence that the downturns in Italy and Spain may at least be easing. The looming concern is the increasing signs of weakness coming out of Germany, the nation others were looking to as a pillar to prop up growth in the broader currency region. With its export engine in reverse gear and domestic demand faltering this is looking less likely as the year progresses. If the core nations falter, the outlook for the periphery will surely worsen."
Douglas A. McIntyre
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