Europe’s Record Jobless Rate Seen Resisting Recovery

But it is the expression of a deeper problem of failed checks and balances that will impact American ties with Europe, says Josef Braml, a transatlantic expert at the German Council on Foreign Relations in Berlin. If the superpower has no room to maneuver, it will have to shift burdens to foes and friends, he says, which will then create a wedge. “We already see it in security policy, Dr. Braml says, especially the waning US commitment to NATO and its focus on Asia. Europe and especially Germans have to think of how they take care of their own security . It’s not that Europe is a stranger to political crisis. Governments from Greece to Italy to Portugal have fallen since the start of the continent’s sovereign debt crisis. And as Europe has been clawing out of its recession, the US has pointed fingers at Brussels and Germany, which powers Europe, for focusing too much on austerity and not enough on growth. As a presidential candidate, Mitt Romney singled out Spain in presidential debates, saying he didn’t want to go down the path to Spain. But now Europe is on the other side, looking at the US as a political system it would not want to emulate. The French daily Le Monde on Tuesday ran the headline : Jefferson, Wake Up. They Have Become Fools! “It is incomprehension, says Arun Kapil, a political science professor at the Catholic University of Paris. And while he says the shutdown is an internal American affair, the tenor of Le Monde sums up the dominant mood. Italian parallels And yet, in some corners of Europe, there might be more understanding. This week, Italy’s prime minister, Enrico Letta, faced the collapse of his fragile coalition government after right-wing leader Silvio Berlusconi threatened that ministers from his People of Freedom party (PDL) would resign.

A meeting between President Obama and Congressional leaders failed to yield a solution on Wednesday. Speaking to CNBC, President Obama said “this time I think Wall Street should be concerned,” about the current impasse and the forthcoming battle over raising the country’s debt ceiling before October 17 in order to avoid a default. “When you have a situation in which a faction is willing to default on U.S. obligations, then we are in trouble,” Obama said. In a speech on Thursday, Obama said accused “extremist” Republicans of playing games with the livelihood of Americans. U.S. stocks were lower on Wall Street, responding to Obama’s comments as well as relatively flat jobless claims data. The Dow was flirting with the psychologically-important 15,000 mark, as investors grew more worried over the impasse in Washington. The Dow Jones Industrial Average tumbled more than 150 points. Meanwhile in Italy, Prime Minister Enrico Letta won a vote of confidence on Wednesday after a dramatic u-turn by rival politician, Silvio Berlusconi . With reports that up to 40 members of his party were ready to support Letta in the vote, Berlusconi who had ordered his ministers within the coalition government headed by Letta to resign at the weekend changed his tone and supported the beleaguered prime minister in the vote. In other news, the European Central Bank (ECB) kept its main interest rate unchanged at a record low of 0.5 percent on Wednesday. On the data front, euro zone retail data came in much better than expected on Thursday morning, showing a 0.7 percent rise in August compared with estimates of 0.2 percent. Euro zone services purchasing manager’s index (PMI) data, a measure of business activity, rose slightly showing an uptick to 52.2 in September, better than August’s 50.7 figure and just above a previous estimate. In stocks news, shares of Finmeccanica rose 2.97 percent with reports this week saying that the defense group is stepping up its efforts to sell its power unit.

Europe’s tentative recovery spreads south in September

It stood at 12 percent in July. The situation for the unemployed is particularly bleak in Spain and Greece , where the OECD expects jobless rates to remain above 25 percent in 2014. While unemployment in Spain fell for the first time in two years in the second quarter, net job creation requires at least 1 percent year-on-year economic growth, Economy Minister Luis de Guindos said this month. That level wont be reached before the final quarter of 2014, according to economists surveyed by Bloomberg. Social Tragedy Unemployment in Europe is a social tragedy and we need to address it, OECD Secretary-General Angel Gurria said in July when presenting the organizations annual employment outlook . Siemens AG (SIE) , Europes largest engineering company, will eliminate 15,000 jobs, the Munich-based corporation said on Sept. 29. It initially planned some 8,000 cuts globally, a person familiar with the program told Bloomberg News in October. Earlier this month, Air France-KLM (AF) Group, Europes biggest airline, scrapped a plan to break even at its main French unit this year, putting 2,800 jobs in the country at risk. While most Southern European economies are struggling to provide work for the unemployed, the jobless rate in Germany , the regions largest economy, remained at 6.8 percent in September, according to 31 estimates in a separate Bloomberg survey . Thats close to a two-decade low of 6.7 percent.

WRAPUP 2-Europe’s tentative recovery spreads south in September

Order books in euro zone businesses filled at a faster rate and job cuts slowed to a trickle in September, according to purchasing managers indexes (PMIs) that survey thousands of companies worldwide. In Italy, the strength of the services PMI surpassed all expectations from economists polled by Reuters, suggesting the euro zone’s third-biggest economy was on course to pull out of its longest recession in six decades. British businesses ranging from huge financial corporations to hairdressers again reported solid growth, rounding off the strongest quarter in more than 16 years. Overall, the surveys painted a slightly brighter picture than the “weak, fragile and uneven” recovery alluded to on Wednesday by European Central Bank president Mario Draghi. On balance, they also boded well for the global economy. Indexes from China showed growth picking up there, even if data due later from the U.S. are expected to show a slight easing in the expansion for non-manufacturing companies, which have consistently outpaced their European peers. The main disappointment in Europe was Spain, where a rise in business activity during August – the first in more than two years – proved short-lived as firms slipped back into decline. Still, the data pointed to a broadening recovery across the euro zone, said Nick Matthews, senior European economist at Nomura, though that had yet to be borne out in official data. “The hard data so far for the third quarter has perhaps a bit more on the disappointing side – in particular industrial production …was very weak in July,” said Matthews. “We expect this to bounce back, but this suggests we could see a slightly slower pace of growth in the third quarter relative to the second quarter.” PMI compiler Markit said its surveys suggested the euro zone economy grew around 0.2 percent from July through September, a touch below the 0.3 percent registered in the second quarter.

Europe markets close down as US shutdown drags on

Credit: Reuters/Yorgos Karahalis By Andy Bruce LONDON | Thu Oct 3, 2013 1:07pm BST LONDON (Reuters) – A return to growth last month for French and Italian companies buttressed a tentative economic recovery in Europe, where Britain and Germany continued to lead the way, surveys showed on Thursday. Order books in euro zone businesses filled at a faster rate and job cuts slowed to a trickle in September, according to purchasing managers indexes (PMIs) that survey thousands of companies worldwide. In Italy, the strength of the services PMI surpassed all expectations from economists polled by Reuters, suggesting the euro zone’s third-biggest economy was on course to pull out of its longest recession in six decades. British businesses ranging from huge financial corporations to hairdressers again reported solid growth, rounding off the strongest quarter in more than 16 years. Overall, the surveys painted a slightly brighter picture than the “weak, fragile and uneven” recovery alluded to on Wednesday by European Central Bank president Mario Draghi. On balance, they also boded well for the global economy. Indexes from China showed growth picking up there, even if data due later from the U.S. are expected to show a slight easing in the expansion for non-manufacturing companies, which have consistently outpaced their European peers. The main disappointment in Europe was Spain, where a rise in business activity during August – the first in more than two years – proved short-lived as firms slipped back into decline. Still, the data pointed to a broadening recovery across the euro zone, said Nick Matthews, senior European economist at Nomura, though that had yet to be borne out in official data. “The hard data so far for the third quarter has perhaps a bit more on the disappointing side – in particular industrial production …was very weak in July,” said Matthews. “We expect this to bounce back, but this suggests we could see a slightly slower pace of growth in the third quarter relative to the second quarter.” PMI compiler Markit said its surveys suggested the euro zone economy grew around 0.2 percent from July through September, a touch below the 0.3 percent registered in the second quarter.