Weak Euro Zone Manufacturing; German Unemployment Rises to 7%

Devan Biswas
02 Nov, 2011
New York City

European markets traded volatile as banks rebounded from the lows. Euro zone manufacturing survey indicated a sharp fall in activities in Italy, France and Germany. Separately, German unemployment rose to 7%.

[R]4:20 PM Frankfurt – European markets traded volatile as banks rebounded from the lows. Euro zone manufacturing survey indicated a sharp fall in activities in Italy, France and Germany. Separately, German unemployment rose to 7%.[/R]

European markets braved past Greek bond crisis and looked at the earnings region’s manufacturing measures. The euro was nearly flat $1.377 and yields on Italian bonds traded above 6%.

In Paris, the CAC-40 Index rose 23.40 or 0.8% to 3,091.73 and in Frankfurt the DAX Index increased 46.24 or 0.8% to 5,880.75.

The indexes in Stockholm gained 0.3%, in Madrid fell 0.3%, in Milan added 1% and in Zurich edged up 0.2%. The index in Athens fell 0.2% and in UK gained 0.1%.

The European Financial Stability Facility delayed the sale of €3 billion 10-year bonds “due to market conditions.”

The decision to delay the bond sale came after Greek Prime Minister George Papandreou asked a referendum to decide on the European Union bailout conditions.

Germany sold 5-year notes at a record low yield of 1% and raised €4 billion and Portugal sold €1.2 billion of 3-month.

Germany said that the release of the sixth tranche of €8 billion to Greece is uncertain as Greece hinted it may not need funds till the end of December.

German finance minister spokesman Martin Kotthaus said, “The tranche has not been paid yet. How things proceed is yet to be seen. According to what we hear from Greece, there is no urgent need for the payout until December.”

German Unemployment Rises

German unemployment increased to 7% in October from 6.9% in September according to Federal Labor Agency located in Nuremberg.

The seasonally adjusted number of people searching for work increased 10,000 to 2.94 million.

Germany’s harmonized jobless rate, as measured meeting international standards laid out by the OECD, was 6% compared to the rate of 9.9% in France and 7.9% in Italy and in 9.1% in the U.S.

Factory Output in the Euro Zone Falls

The final reading on the manufacturing index in the euro zone declined to 47.1 in October from 47.3 in the preliminary assessment according to the Markit.

The Eurozone Purchasing Managers Index declined for the third month in a row and was lower from 48.5 in September.

The factory output measure declined to 46.6 in October from 49.6 in September and dropped at the fastest pace since mid-2009. The number below 50 indicates shrinkage and above 50 shows a growth.

Manufacturing in Germany declined for the first time in two years and French manufacturing decreased in the month but Italy’s manufacturing dropped at the steepest pace in the month since record keeping began in 1997.

VW, Daimler and BM U.S. Sales Rises

Volkswagen Group of America Inc sales soared 35.6% to 38,450 from 28,355 a year ago. Audi unit sales increased 25.8%, Volkswagen unit sales surged 39.6% and Bentley sales increased 35%.

Mercedes-Benz USA unit sales in the month gained 25.7% to 19,444 from a year ago. Maybach failed to sell a single vehicle compared to only 1 in the month a year ago. Sales of the Smart decreased 10.9% to 327 from 367 a year ago.

BMW of North America Inc sales in the month increased 17.4% to 27,319 compared to a year ago month to 23,266. Rolls Royce sales declined 29.5% to 31 from 44 a year ago.

Gainers & Losers

Deutsche Bank AG gained 2.5% to €28.64, BNP Paribas SA rose 4% to €29.80 and Societe Generale SA added 1.3% to €17.90.

Intesa Sao Paolo SpA increased 3 cents to €1.11 and UniCredit SpA increased 3 cents to 77 cents.

HSBC Holdings plc increased 8.7 pence to 541.30 pence and Barclays rose 2% or 181.05 pence.

BMW AG increased 1.2% to €57.30, Volkswagen AG rose 5% to €114.00 and Daimler AG added 0.2% to €35.01.