Growth in Europe’s manufacturing industry slowed and unemployment held at a 12-year high as a cooling global recovery restrained demand.
A gauge of manufacturing in the 16-nation euro region declined to 53.7 in September from 55.1 the previous month, London-based Markit Economics said today. A separate report showed that the region’s jobless rate stayed at 10.1 percent in August, the highest since June 1998.
Europe’s economy is cooling after growth accelerated to the fastest pace in four years in the second quarter. Manufacturing in Germany eased last month, while it shrank in Spain and Ireland, national reports today showed. The European Commission sees a more “moderate” expansion in the second half as unemployment hobbles consumer spending and governments step up austerity measures to reduce budget deficits.
“Global growth appears to be slowing and domestic demand is likely to be limited in a number of euro-zone countries by tighter fiscal policy,” said Howard Archer, an economist at IHS Global Insight in London. Contractions in Spain and Ireland “highlight the divergent performance of the euro zone.”
The euro-area gauge compares with an initial estimate of 53.6 released on Sept. 23. It’s the 12th straight month with a reading above 50, indicating expansion. A measure of new export orders fell to the lowest since November, while total orders rose at the slowest pace in a year Markit said.
The euro was little changed against the dollar immediately after the report, before extending its gain. It traded at $1.3720 at 10:05 a.m. in London, up 0.6 percent since yesterday.
‘Caution’
In Germany, the manufacturing gauge dropped to 55.1 in September from 58.2, the lowest since January. Italy’s measure also declined, while France’s index rose to 56 from 55.1.
European services growth also slowed in September, Markit said on Sept. 23. It will publish the final figure, along with a composite gauge for both industries, on Oct. 5.
European Central Bank officials will hold their next policy meeting on Oct. 9 after last month extending emergency measures for banks into 2011. ECB President Jean-Claude Trichet said yesterday in Brussels that there’s a need for “caution.”
Other economies are also showing signs of cooling, prompting central banks from the Federal Reserve to the Bank of Japan to consider additional steps to support their recoveries.
Australian manufacturing shrank in September for the first time in nine months, while a factory index in the U.K. dropped to a 10-month low. A U.S. manufacturing gauge probably dropped to 54.5 from 56.3, according to the median of 83 estimates in a Bloomberg survey. The Institute for Supply Management will publish the data at 10 a.m. in New York.
China Growth
A report in China showed manufacturing there expanded at the fastest pace in four months, with a government index published today rising to 53.8 from 51.7 in August.
While European companies including carmakers Renault SA and Volkswagen AG are benefiting from demand in Asian nations such as China, that’s being partly offset by weakness in Europe.
The automotive market in Europe may shrink 2 percent in 2011 after a contraction this year, Renault Chief Executive Officer Carlos Ghosn said yesterday. Sales in the region remain “very weak,” said Nick Reilly, CEO of General Motors Co.’s Opel division.
The outlook for Europe’s economy is being clouded as investors question the ability of nations such as Ireland and Portugal to handle their fiscal burdens without external aid.
The yield spread between the two nations’ 10-year debt and German bunds widened to a record this week before narrowing. Portugal unveiled tougher measures to reduce its budget gap, while Ireland said it remains committed to meeting a 2014 deficit target even as the cost of bank bailouts mounts.
Still, some data point to a limited slowdown. European confidence in the economic outlook unexpectedly improved this month to the highest since January 2008.
“Economic developments have been more positive than expected,” Jean-Claude Juncker, who heads the euro-area group of finance ministers, said in Brussels yesterday. “We’re fully aware of the remaining headwinds for the euro-area economy. That requires that we go ahead with necessary fiscal consolidation.”
A gauge of manufacturing in the 16-nation euro region declined to 53.7 in September from 55.1 the previous month, London-based Markit Economics said today. A separate report showed that the region’s jobless rate stayed at 10.1 percent in August, the highest since June 1998.
Europe’s economy is cooling after growth accelerated to the fastest pace in four years in the second quarter. Manufacturing in Germany eased last month, while it shrank in Spain and Ireland, national reports today showed. The European Commission sees a more “moderate” expansion in the second half as unemployment hobbles consumer spending and governments step up austerity measures to reduce budget deficits.
“Global growth appears to be slowing and domestic demand is likely to be limited in a number of euro-zone countries by tighter fiscal policy,” said Howard Archer, an economist at IHS Global Insight in London. Contractions in Spain and Ireland “highlight the divergent performance of the euro zone.”
The euro-area gauge compares with an initial estimate of 53.6 released on Sept. 23. It’s the 12th straight month with a reading above 50, indicating expansion. A measure of new export orders fell to the lowest since November, while total orders rose at the slowest pace in a year Markit said.
The euro was little changed against the dollar immediately after the report, before extending its gain. It traded at $1.3720 at 10:05 a.m. in London, up 0.6 percent since yesterday.
‘Caution’
In Germany, the manufacturing gauge dropped to 55.1 in September from 58.2, the lowest since January. Italy’s measure also declined, while France’s index rose to 56 from 55.1.
European services growth also slowed in September, Markit said on Sept. 23. It will publish the final figure, along with a composite gauge for both industries, on Oct. 5.
European Central Bank officials will hold their next policy meeting on Oct. 9 after last month extending emergency measures for banks into 2011. ECB President Jean-Claude Trichet said yesterday in Brussels that there’s a need for “caution.”
Other economies are also showing signs of cooling, prompting central banks from the Federal Reserve to the Bank of Japan to consider additional steps to support their recoveries.
Australian manufacturing shrank in September for the first time in nine months, while a factory index in the U.K. dropped to a 10-month low. A U.S. manufacturing gauge probably dropped to 54.5 from 56.3, according to the median of 83 estimates in a Bloomberg survey. The Institute for Supply Management will publish the data at 10 a.m. in New York.
China Growth
A report in China showed manufacturing there expanded at the fastest pace in four months, with a government index published today rising to 53.8 from 51.7 in August.
While European companies including carmakers Renault SA and Volkswagen AG are benefiting from demand in Asian nations such as China, that’s being partly offset by weakness in Europe.
The automotive market in Europe may shrink 2 percent in 2011 after a contraction this year, Renault Chief Executive Officer Carlos Ghosn said yesterday. Sales in the region remain “very weak,” said Nick Reilly, CEO of General Motors Co.’s Opel division.
The outlook for Europe’s economy is being clouded as investors question the ability of nations such as Ireland and Portugal to handle their fiscal burdens without external aid.
The yield spread between the two nations’ 10-year debt and German bunds widened to a record this week before narrowing. Portugal unveiled tougher measures to reduce its budget gap, while Ireland said it remains committed to meeting a 2014 deficit target even as the cost of bank bailouts mounts.
Still, some data point to a limited slowdown. European confidence in the economic outlook unexpectedly improved this month to the highest since January 2008.
“Economic developments have been more positive than expected,” Jean-Claude Juncker, who heads the euro-area group of finance ministers, said in Brussels yesterday. “We’re fully aware of the remaining headwinds for the euro-area economy. That requires that we go ahead with necessary fiscal consolidation.”
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