E

1st

EUURROOPPEEAANN IINNDDUUSSTTRRYY MMOONNIITTOORR 2011 Second Half Issue

October 2011

[OVERVIEW: Economic recovery slows as Eurozone crisis takes its toll] The recovery in the European economy slowed in H1 2011 as austerity measures aimed at reducing budget deficits coupled with bail-outs of Eurozone countries began to take their toll on consumer and business confidence. Consumer spending has been curtailed significantly as wages have been restrained, inflation has risen and unemployment has remained stubbornly high.

In the raw materials sector, mixed fortunes resulted in a flat overall performance. The steel sector saw slowing growth as the key automotive and construction sectors saw stalling growth, though export demand from developing countries remained positive.

Manufacturing industry saw its previous growth rates tail off, though once again export demand remained a positive factor. Demand for machinery and machine tools remained positive, though domestic capex saw signs of weakening as the automotive sector, hit by a slowdown in consumer spending, began to suffer.

The service sector saw some of the region’s strongest performances in H1 2011, in aviation and hotel, but this was largely on the back of weak comparables. Overall the service sector, too, witnessed a considerable slowdown, with retail going into negative growth in the first half. At the same time, revenues in mobile telephony remained on a downward trajectory, while adspend has also slowed noticeably as advertisers batten down the hatches amid falling consumer spending.

The outlook is weak as economic uncertainty over the future of the Eurozone mounts amid the second Greek bailout, at a time when Italy and Spain are also looking shaky. All of this is increasing the likelihood of a global double dip recession, impacting severely on consumer and business confidence. Large ticket consumer spending, such as automotives and housing, are expected to be particularly hard-hit, while businesses curtail capex, leading to knock-on effects up the supply chain to raw materials and down it to services. Thus most industrial sectors face testing times ahead.

Table of Contents

Industry Indicator Latest Date Page

1. Western European Car Registrations Aug 2011 Automotives

2. UK Passenger Car Production Aug 2011 2

Machinery 3. German Machine Tool Orders Jun 2011 Electronics 4. European PC Shipments Jun 2011

3

5. European Crude Steel Production Jul 2011 Steel

6. European Steel Product Prices Aug 2011 4

Petrochemicals 7. European Ethylene Prices Sep 2011 Electricity 8. Western European Electricity Prices Sep 2011

5

9. UK Retail Sales Volumes Aug 2011 Retail

10. Eurozone Retail Sales Volumes Jul 2011 6

Aviation 11. European Air Passenger Traffic Jun 2011 Hotel 12. UK Hotel Occupancy Levels / RevPAR Jul 2011

7

Telecoms 13. Western European Mobile ARPU Jun 2011 Media 14. UK Advertising Expenditure Jun 2011

8

15. UK C.London Office Vacancy Rate / Rents Jun 2011 Offices / Housing

16. UK House Prices / Mortgage Approvals Jul 2011 9

Appendix 1 UK Macroeconomic Indicators 11

Appendix 2 Eurozone Macroeconomic Indicators 12

Appendix 3 Main Commodity Prices and Indices, Main FX Rates 13

Note: The "FORECAST" period added in this edition is a short-term outlook (about 6 months to

1 year).This bulletin is issued semi-annually.

1

1. Western European Car Registrations Forecast: Negative growth expected to continue due to Euro-crisis

0

300

600

900

1,200

1,500

1,800

2,100

06 07 08 09 10 11-40

-30

-20

-10

0

10

20

30

40

Registrations (LHS)6 months moving average (Grow th rate) (RHS)Grow th rate (YoY) (RHS)

(Source: ACEA) (Unit: '000, %)

Due to the end of scrappage schemes in Spain and the UK, and the ongoing weakness in Southern Europe, new car registration in Western Europe declined by 1.3% YoY to 8.69m units in the first 8 months of 2011.

In Spain, Italy and the UK, the total of new car registrations significantly decreased by 11.9% YoY to 3.01m units in the first 8 months. In France, where car sales in the first 8 months sustained the previous year’s level (+0.4% YoY), growth turned negative from April due to the end of its scrappage scheme. Conversely, car sales in Germany showed a double-digit increase (+11.2% YoY) as the German economy recovered strongly through H1.

While carmakers which benefitted from the incentives, such as Renault and PSA, saw registrations fall (-8.6% YoY), VW and BMW, whose main market is Germany, enjoyed strong sales (+8.2% YoY) due to new models.

German consumer sentiment is set to weaken due

to rising fears of a return to recession. Financial turmoil in Europe due to the ongoing euro crisis is likely to weigh on consumer confidence in Western Europe as a whole. Thus, new car registrations in Western Europe are expected to see continued negative growth through H2 2011.

2. UK Passenger Car Production Forecast: Production is expected only just to stay around last year’s level

0

25

50

75

100

125

150

175

06 07 08 09 10 11-100

-80

-60

-40

-20

0

20

40

60

80

100

Production (LHS)6 months moving average (Grow th rate) (RHS)Grow th Rate (YoY) (RHS)

(Source: SMMT) (Unit: 000, %)

Due mainly to expanding of overseas demand, UK passenger car production sustained positive, a 4.4% increase in the first 8 months of 2011 to 0.85m units.

Among the carmakers, Nissan, which enjoyed strong sales of its compact SUVs, and Land Rover, which launched renewed models, increased output. Conversely, Toyota and Honda experienced declining production due to the huge impact of the Japan earthquake.

While domestic demand declined steeply due mainly to the end of the scrappage scheme of 2010, overseas demand expanded its share of UK passenger car production to account for around 80% of the total thanks to increasing demand in Europe.

There is a good sign that the supply chain

recovered to the pre-quake level and the hangover from the scrappage schemes in major markets ran its course by the June 2011. Nevertheless, as the European economic outlook is poor, new car registrations in Europe are likely to decline. Thus, UK passenger car production in H2 2011 is expected to slow, and only just to stay around last year’s level.

2

3. German Machine Tool Orders Forecast: Growth likely to turn negative

40

60

80

100

120

140

160

06 07 08 09 10 11-100

-80

-60

-40

-20

0

20

40

60

80

100Orders (3m moving average)YoY Grow th Rate (RHS)

(Source: Destatis) (Unit: Index (2005=100), %)

Orders of German machine tools increased by 50% YoY in H1 2011. This figure is largely the result of capital investment buildup by carmakers and electronics manufacturers due to the economic recovery.

Overseas demand, which accounts for about 70% of the total, increased steadily. Carmakers continued to invest in expanding production worldwide, while the electronics sector in China and aviation sector in the US also continued to increase capital spending.

At the same time, domestic demand, which comprises around 30% of the total, also increased due mainly to expanding investment in the automotive sector.

In H2 2011, orders of German machine tools from

emerging markets such as China are expected to stay positive. However, as demand in Europe and the US is likely to slow due to the negative impact on business confidence of the increasing economic uncertainty, order growth as a whole is expected to turn negative.

4. European PC Shipments Forecast: PC shipments will remain below the previous year’s figure

0

5

10

15

20

25

30

35

06 07 08 09 10 11-20

-10

0

10

20

30

Shipments(LHS)4Q Moving Average(Shipments)(LHS)Grow th Rate(YoY)(RHS)

(Unit: mil,%)(Source: Gartner Group)

European PC shipments declined by 12.9% YoY to 38m units due to weak consumer spending in Western Europe and the shift in demand from PCs to media tablets.

Demand for mobile PCs, which comprise about 70% of the total, decreased sharply by 14.5% YoY due to lacklustre demand from consumers and the shifting demand to iPads and similar. At the same time, demand for desktop PCs, which comprise mainly the professional-use segment, also witnessed negative growth, a 9.6% decline YoY, as many companies remained cautious about new capex due to the slow economy in Western Europe.

Western European shipments, which account for around 70%, declined sharply by 18.4%, while Eastern European shipments grew steadily by 5.3% YoY due to the strong consumer pushed by the economic recovery.

Mobile PC demand will stay below the previous

year’s level as consumer demand is likely to remain sluggish while there is also the shift toward media tablets, while desktop PC demand will stay negative because a full-blown recovery in new capex is still unlikely anytime soon. Thus, European PC shipments in H2 2011 are expected to remain negative.

3

5. European Crude Steel Production Forecast: Steel demand is expected to weaken in 2H 2011 but will continue to grow

8

10

12

14

16

18

20

06 07 08 09 10 11-60%

-40%

-20%

0%

20%

40%

60%

80%EU27 Steel Production (LHS)EU27 YoY grow th (RHS)

(Sources: Bloomberg; IISTEURO) (Unit: mil tonnes, %)

European steel production in the first half of 2011 was up 4% on the same period in 2010. YoY monthly growth rates started to slow down in Q2 2011 after recording just under 10% growth for six months.

Demand from the manufacturing sector reflecting both strong domestic and export-led demand contributed to the growth in the European steel industry. Demand from the construction sector was also strong in Q1 supported by mild weather. However, sovereign issues in Europe started to affect the strong export-led German economy on top of a seasonal lull in demand during summer.

Uncertainty about the European economy due to the financial turmoil is likely to continue weighing on steel demand. After ramping up in the first half of the year, steel production in Europe is likely to slow down, reflecting weakening demand.

Demand from mechanical engineering is expected to remain a key driver, albeit at a slower pace. However, the outlook for demand from the construction sector is expected to be weak for the remainder of 2011 due to a lack of large new construction projects as a result of the austerity measures of European governments.

6. European Steel Product Prices Forecast: Lacklustre demand is likely to limit growth in European steel prices

300

400

500

600

700

800

900

06 07 08 09 10 11

EU Cold RollEU Wire Rod

(Source: Bloomberg; MBSTST32, MBSTST28 (EU cfr))

(Unit: EUR/tonne)

Since the beginning of the year, European cold roll prices fell continuously after reaching their recent high of EUR675/tonne. The strengthening euro and relatively favourable demand conditions in flat steel attracted exporters outside the EU, and flat steel imports surged 53% YoY in Q1 2011.

Meanwhile, wire rod prices sustained their level better at around EUR575/tonne. This is partly because of favourable seasonal factors in the construction sector during summer months as well as planned mill closures. However, overall demand for wire rod remains low due to the weak construction sector.

European steel prices are unlikely to increase considering the growing supply in the European steel market as a result of a surge in imports and production expansion in the first half of this year, while demand for steel in Europe is faltering amid economic uncertainty.

Raw material costs are expected to remain at elevated levels due to the strong Chinese demand and supply constraints. This may make it difficult for European steel makers to reduce their prices.

4

7. European Ethylene Prices Forecast: Ethylene prices are expected to stay at current levels with a possibility of further decline

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

06 07 08 09 10 11

EthyleneNaphthaEthylene-Naphtha Spreads

(Source: Bloomberg; POLIETNW, NAPHNECC)(Unit: US$/tonne)

Falling oil prices together with subdued demand led to a strong decline in European ethylene prices at the end of the first half of 2011 reaching US$1,200/tonne at the beginning of July 2011.

Speculation about possible production problems combined with improved demand trends, some growth in oil prices and unsustainably low production margins temporarily pushed European ethylene prices over US$1,400 level at the beginning of August 2011.

However, as the prospects of the global economy recovery remained poor and naphtha costs declined again as a result of weaker crude oil prices, the European ethylene price trend turned downwards.

As the uncertainty regarding the health of the global economy remains, European ethylene demand will likely stay weak during autumn 2011. Oil prices are also expected to remain at their current level if not slightly lower.

As a result ethylene prices in the second half of 2011 will probably remain at the current level with a possibility of further decline depending on the situation in the crude oil and naphtha markets. The naphtha-ethylene spread will also decline under pressure from weak downstream demand.

8. Western European Electricity Prices Forecast: Electricity prices to remain largely flat amid slow industrial output and stable gas prices

0

20

40

60

80

100

120

140

160

180

06 07 08 09 10 2011

UK Germany France

(Source: Bloomberg; ELUPDAHD, ELFPDAHD,ELGPDAHD)

(Unit: EUR/MWh)

(Day-ahead peak load)

European electricity prices have remained largely stable in the first eight months of the year. The main causes of this have been low and stable gas prices, the basis of European electricity prices, on the one hand, and a sluggish recovery in industrial demand, the main growth driver, on the other.

While demand typically tends to soften somewhat in the summer months, this trend was less pronounced in 2011 due to tighter supply following the closure of a number of German nuclear plants in the wake of the Fukushima disaster in Japan, resulting in increased imports from France and supporting prices in both of these markets.

The outlook is for a continuation of stable prices as

there is little movement in the gas price at a time when oil prices are softening gradually. At the same time, there is little expectation of an economic rebound in the region, so industrial demand is unlikely to pick up sharply.

Winter tends to see an increase in electricity use, which could test the region’s generation capacity following Germany’s nuclear shutdowns, but this notwithstanding, there should be ample generating capacity to deal with this. As a result, prices should not climb far above their current level around €60/MWh.

5

9. UK Retail Sales Volumes Forecast: Growth likely to turn negative

0

20

40

60

80

100

120

140

160

06 07 08 09 10 11-10

-5

0

5

10

Non-Food Index (LHS)Food IndexYoY Total [UKRVAYOY] * YoY Food [UKRVFRYY] * YoY Household goods [UKRVNFHY] *

(Unit:Index(2006=100),(Source: Bloomberg, ONS)

*YoY growth (3m moving average)

Growth in volumes (excl. fuel) slowed progressively throughout H1 2011, though strong sales in January meant that the average for H1 was 1.4%, up slightly on the 1.3% recorded in H2 2010.

Both food and household goods saw volumes dip further as a result of a combination of low consumer confidence, continued inflation and the rise in VAT from January. Thus food sales volumes declined by 1.7% in H1 2011 while household goods declined by 2.9%.

Household goods saw an 8.5% spike in sales in January as customers rushed to take advantage of retailers choosing not to pass on the VAT rise for as long as possible, but subsequently volumes fell sharply as consumer confidence waned. Meanwhile, food volumes saw ongoing volume declines as household budgets have been squeezed, the only respite being a 1.1% rise in volumes in April as Easter combined with good weather and the royal wedding.

H2 2011 is likely to see a continuation of the

slowing trend, with overall growth turning negative from August as both food and non-food continue to suffer the effects of inflation at over 4.5%, higher taxes, and increasing unemployment, with the public sector being particularly hard-hit.

10. Eurozone Retail Sales Volumes Forecast: Sales slowdown expected to accelerate as eurozone crisis dents consumer confidence

0

20

40

60

80

100

120

140

160

06 07 08 09 10 11-8

-6

-4

-2

0

2

4

6

8

Non-Food Index (LHS)Food Index (LHS)YoY Total [RSSAEMU:IND] *YoY Food [RSSFEMU:IND] *YoY Household goods [RSSHEMU] *

(Source: Bloomberg, Eurostat) (Unit:Index(2005=100), %)

*YoY growth (3m moving average)

Volume growth averaged -0.1% in H1 2011, a distinct slowdown from H2 2010 when growth had accelerated to 1.0%. Monthly figures show a progressive slowdown in volumes from 0.5% growth in January to a decline of 0.3% in June.

This continues the trend seen in late 2010, and comes as consumer confidence remains battered by a combination of inflation and austerity measures.

Non-food sales have outperformed food, declining by 0.1% as household goods saw German and French demand offset a collapse in Spain, while textiles volumes remained positive, driven chiefly by growth in France and Italy. Food volumes saw negative growth of -0.8% due to weak growth in France and Germany failing to make good strong declines in Italy and Spain.

Overall, France enjoyed the strongest volume growth as austerity measures have yet to bite, increasing by 4.1%, followed by Germany, while Italy saw a slight decline and Spain fell by 6.8%.

H2 2011 is expected to see a further slowdown in volumes due to the ongoing euro crisis denting consumer confidence in Germany and France, while new austerity measures will have a growing impact in Italy. At the same time, inflation remains a problem amid wage restraint and rising unemployment.

6

11. European Air Passenger Traffic Forecast: Growth rate set to slow slightly

-10

-5

0

5

10

15

06 07 08 09 10 11

OtherMiddle EastAsiaNorth AmericaEuropeRPK YoY Grow th

(Source: AEA) (Unit: %)(*Columns denote contribution)

H1 2011 saw a considerable rebound in growth, with traffic growing by 8.6% YoY. This marked an acceleration of the trend which saw traffic increase by 0.6% and 4.3% in the preceding two half years.

The main factor in growth was a strong recovery in Q2 2011, increasing by 12.3% YoY, as in Q2 2010 airline travel had been hit by the volcanic eruption in Iceland, leading to a 1.3% decline despite a general recovery in airline travel at the time.

But underlying this is ongoing growth from most regions except North Africa. Both Europe and North America saw the strongest rebound from volcano, but they also saw a recovery in overall demand levels. Meanwhile, the Asia and South America routes continued their recent growth trend as these regions’ economies continue to outperform the global average.

H2 2011 should see slower growth as the one-off volcano effect falls away, while economic conditions impact adversely on Europe and North America, although other regions should continue to grow. Profits will be hit as 2010’s capacity constraints have been removed, with load factors slightly down YoY, at a time when the weak euro combines with high fuel prices and weakening business travel demand to hit airlines. This could lead to more cost cuts and industrial action.

12. UK Hotel Occupancy Levels / RevPAR Forecast: Recovery set to continue if Euro-crisis and riots do not impact tourism.

55

60

65

70

75

80

85

07 08 09 10 11-15

-10

-5

0

5

10

15

Occupancy (LHS)RevPAR (% YoY) (3 month moving average) (RHS)

(Unit: %)(Source: TRI Hospitality Consulting)

Revenue growth was strong in London in H1 2011, driven by a 12.6% increase in average room rates to £147.81 from £131.31 in H2 2010. This was due to strong change in commercial sector demand in the corporate (+11.2%) and conference (+25.5%) segments.

Revenue for UK hotels (excluding London) was also strong, rising by 1.9%, the largest increase since H1 2009. This was helped by a 3% increase in food and beverage revenue.

In London, the combination of higher revenue and a 1.7% reduction in payroll costs saw profit per room grow at 10%. Outside of London, profitability was driven by greater increases in RevPAR in Bristol (+10.3%), Edinburgh (+13.2%) and Manchester (+29.9%), as a result of increased flow of UK resident tourists to these cities.

In H2 2011 the UK hotel industry is expected to grow. All the main tourist categories are expected to increase: Europe 12.6mn (+3.5%), North America 4.39mn (+0.5%) and Asia Pacific 3.58mn (+5.4%). Two developments could limit the level of inbound tourists; firstly, the potential weakening of the euro against the pound and, secondly, the negative impact of the recent UK riots which received global negative publicity.

7

13. Western European Mobile ARPU Forecast: ARPU will continue to decline due to regulatory tariff cuts and price competition

10

15

20

25

30

35

40

06 07 08 09 10 11

France GermanyItaly SpainUK

(Source: Informa) (Unit: GBP for UK, EUR for the rest )

(*Figures are blended ARPU of both post paid and pre-paid subscribers)

Western European operators have seen a prolonged downward trend in average revenue per user (ARPU) due to a combination of continuous regulatory pressure, intense competition and shrinkage in the economy.

As wireless dongles and smartphones encouraged data usage in the UK and Germany, ARPU increased temporarily during H2 2010, however price competition dragged ARPU down in H1 2011. Spain in particular has seen a severe drop due to weakening macroeconomic fundamentals, which curtailed individuals’ mobile phone usage. The weakening performance in Italy has been primarily driven by a tougher competitive environment which led operators to cut prices. The French market, which has been less competitive than the rest of Western Europe, saw declines in ARPU accelerate due to the steep cut in interconnection charges between operators set by the regulator.

ARPU in Western Europe will continue to decline

amid ongoing tariff cuts and price competition in the market whilst data services, a growth driver of the sector, will barely compensate the loss in voice services.

14. UK Advertising Expenditure Forecast: Adspend is expected to stagnate due to weak economy

0

1,000

2,000

3,000

4,000

06 07 08 09 10 11-30

-25

-20

-15

-10

-5

0

5

10

15

OtherInternetNew spapersTVNon-internet Grow th Rate (YoY)(RHS)Total Grow th Rate (YoY)(RHS)

(Unit: GBP Million, %)(Source: WARC)

Although industry sectors increased adspend with the expectation of economic recovery from late 2009 though early 2010, adspend fell by 4% y-on-y in H1 2011 due to the moribund economic condition.

Both Internet and TV have seen growth slow compared to 2010, however they have still performed ahead of the trend; nevertheless, this growth has not been sufficient to cushion the severe fall in spend across press and radio.

Among advertiser categories, the private sector, which currently accounts for 95% of all adspend, saw a gain in share, whereas the public sector lost 2pp in share in H1 2011 compared with two years ago amidst budget cuts. Industrial, financial and services saw a slight gain whilst other sectors remained flat.

Adspend in H2 2011 is expected to be virtually flat

due to a weakening economy, reflecting a series of more pessimistic GDP forecasts. Moreover, most industry sectors will continue to be cautious about increasing marketing budgets, thus adspend will be far from reaching its previous boom-time levels.

8

15. UK Central London Office Vacancy Rate / Rents

Forecast: Modest increase in rents due to short term supply constraint and stable demand

0

5

10

15

20

06 07 08 09 10 1110

20

30

40

50

60

70

80

90

100

110

120

130

City Vacancy Rate (LHS)West End Vacancy Rate (LHS)City Prime Rent (RHS)West End Prime Rent (RHS)

(Source: Jones Lang LaSalle) (Unit: %, GBP/sq.ft .)

Following a strong year of growth in 2010, London office rents stabilised in H1 2011 as prime City rents remained unchanged for the third consecutive quarter. In West End however, prime rents did maintain steady growth and vacancy rates dropped to their lowest levels since 2008.

The City experienced subdued leasing activity in H1 2011. Nevertheless, supply/demand dynamics appeared to be evenly poised as low levels of available office space were balanced by soft demand. Accordingly, there was little change in rents or vacancy rates.

West End leasing activity remained consistent over H1 2011 and in line with H2 2010. A visible reduction in office supply was noted over the first half of the year and a minor shortage now exists.

Continued concerns over the Eurozone and UK

economic outlook will hinder growth in rental demand as many firms remain cautious about their business plans. Even so, rents in the City and West End are expected to slowly increase over the remainder of 2011 and into 2012 as a short term supply shortage transpires (the effect of the financial crisis construction freeze in 2008).

16. UK House Prices / Mortgage Approvals Forecast: House prices to continue to slowly fall as low mortgage approvals persist

400

500

600

700

06 07 08 09 10 1120

60

100

140House Prices Halifax(1983=100, LHS)Mortgage approvals (RHS)

(Source: HBOS / Bank of England) (Unit: Index, '000)

UK house prices further slipped throughout H1 2011 and into Jul/Aug, continuing the downward trend set in H2 2010. Prices have now retracted 4% from the highs of last year and remain down 19% on the pre-financial crisis peak.

A continued period of low mortgage approvals was the principal driver behind the price decline, as many buyers (particularly first time buyers) struggled to secure financing and were restricted from the market.

The only UK region resilient to the downturn was the London market, which registered solid price growth over the past year thanks to strong demand. Prices in London have recovered remarkably since the financial crisis and are now only marginally below their peak in 2007. Removing London from the equation accentuates the weakness of the nationwide market.

UK house prices are expected to continue to fall at

a modest rate over the remainder of the year as a low number of mortgage approvals constrain demand. Enduring economic uncertainty and rising unemployment will also continue to weigh on the market.

9

Appendix 1 (UK Macroeconomic Indicators)

GDP Industrial Production

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

05 06 07 08 09 10 11(Unit: QoQ %)(Source: Bloomberg, EUGNUKQQ)

(*Seasonally adjusted)-20

-15

-10

-5

0

5

10

05 06 07 08 09 10 11

All productionManufacturing

(Source: Bloomberg, UKIP IYOY, UKMP IYOY) (Unit: YoY %)

(*Seasonally adjusted)

Business Insolvencies Total Unemployment / Unemployment rate

0

1,000

2,000

3,000

4,000

5,000

6,000

05 06 07 08 09 10 11-40

-20

0

20

40

60

80Number (RHS)Grow th rate (YoY) (LHS)

(Source: Bloomberg, UKINTOTL, UKINTOTY) (Unit: number, % )

(*England & Wales)600

800

1,000

1,200

1,400

1,600

1,800

05 06 07 08 09 10 110.0

1.0

2.0

3.0

4.0

5.0

6.0Actual (LHS)Unemployment Rate

(Source: Bloomberg, UKUER, UKUETOTL) (Unit: '000, % )

(*Seasonally adjusted)

RPI / CPI PMI

-2

-1

0

1

2

3

4

5

6

05 06 07 08 09 10 11

RPICPI

(Source: Bloomberg, UKRP CJYR, UKRP YOY) (Unit: YoY %)

30

35

40

45

50

55

60

65

05 06 07 08 09 10 11(Anything above 50 indicates expansion,

below 50 indicates contraction. )(Source: Bloomberg, PMITMUK)

10

Appendix 2 (Eurozone Macroeconomic Indicators)

GDP Industrial Production

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

05 06 07 08 09 10 11(Unit: QoQ %)(Source: Bloomberg, EUGNEMUQ)

(*Seasonally adjusted)-30

-20

-10

0

10

20

05 06 07 08 09 10 11

Eurozone France Germany

(Source: Bloomberg, EUIP EMUY, EUIP FRYY) (Unit: YoY %)

(*Workday adjusted, excluding construction)

Construction Production Index Unemployment Rates

-3

-2

-1

0

1

2

3

05 06 07 08 09 10 11

EurozoneFranceGermanySpain

(Source: Bloomberg, EUMGEM UM, EUMGDE, EUMGES, EUMGFR) (Unit: QoQ %)

(*Seasonally adjusted,4 quarter moving average)

5

6

7

8

9

10

11

05 06 07 08 09 10 11(Unit: %)(Source: Bloomberg, UMRTEMU)

(*Seasonally adjusted)

Consumer Price Index PMI

-1

0

1

2

3

4

5

05 06 07 08 09 10 11

All ItemsAll Items Excluding Energy

(Source: Bloomberg, ECCP EMUY, CP XNEMUY) (Unit: YoY % )

30

35

40

45

50

55

60

65

06 07 08 09 10 11(Anything above 50 indicates expans ion,

below 50 indicates contraction. )(Source: Bloomberg, P MITMEZ)

11

Appendix 3 (Main Commodity Prices and Indices, Main Foreign Exchange Rates)

Crude Oil (Brent) Prices UK Gas Prices

0

20

40

60

80

100

120

140

160

05 06 07 08 09 10 11(Source: Bloomberg; CO1) (Unit: USD/barrel)

(*Generic 1st 'CO' future, montly average)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

05 06 07 08 09 10 11(Source: Bloomberg; NBP GQTR1) (Unit: GBP/Therm)

(*First Quarter Natural Gas Forward Price, montly average)

CRB Index London Gold prices

0

100

200

300

400

500

05 06 07 08 09 10 11

(Source: Bloomberg; CRY) (1967=100)

(*Reuters / Jefferies CRB Index, montly average)200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

05 06 07 08 09 10 11(Source: Bloomberg; GOLDLNP M) (Unit: USD/ounce)

(*London Gold Market Fixing Ltd PM Fix Price, montly average)

Copper Prices Aluminium Prices

0

2,000

4,000

6,000

8,000

10,000

12,000

05 06 07 08 09 10 11

(Source: Bloomberg; LMCADY) (Unit: USD/MT)

(*LME copper spot, montly average)0

500

1,000

1,500

2,000

2,500

3,000

3,500

05 06 07 08 09 10 11

(Source: Bloomberg; LMAHDY) (Unit: USD/MT)

(*LME alminium spot, montly average)

12

CRB Food Price Index Cotton Prices

150200250300350400450500550600650

05 06 07 08 09 10 11

FoodstuffFat and Oil

(Source: Bloomberg; CRB FOOD, CRB FTOL)

(*CRB spot price index, montly average, 1967=100)

(1967=100)

0

50

100

150

200

250

05 06 07 08 09 10 11(Source: Bloomberg; COTLOOKA) (Unit: USd/lb)

(*Cotlook Ltd Raw Cotton A Index, montly average)

Cocoa Prices GBP/EUR

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

05 06 07 08 09 10 11(Source: Bloomberg; JMCXCCP I) (Unit: USD)

(*JP Morgan Cocoa Price Index,montly average)

1.0

1.1

1.2

1.3

1.4

1.5

1.6

05 06 07 08 09 10 11

(EUR)

Weak Pound

Strong Pound

(*Montly average)

(Source: Bloomberg; GBPEUR)

EUR/USD, GBP/USD EUR/JPY, GBP/JPY

1.0

1.2

1.4

1.6

1.8

2.0

2.2

05 06 07 08 09 10 11

EUR/USDGBP/USD

Strong Dollar

Weak Dollar

(*Montly average)

(Source: Bloomberg, EURUSD, GBPUSD)

(USD)

100

120

140

160

180

200

220

240

260

05 06 07 08 09 10 11

EUR/JPYGBP/JPY

(JPY)

Strong Yen

Weak Yen

(*Montly average)

(Source: Bloomberg; EURJPY, GBPJPY)

13

14

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