Persistent Weakness In European Manufacturing Sector, Record Low Jobless Rate In Euro Area

Bridgette Randall
02 Oct, 2023
Frankfurt

European markets reversed earlier gains after the release of manufacturing survey and amid ongoing rate path worries. 

Market indexes in Frankfurt, Paris and London edged lower amid worries of continuing slowdown in the manufacturing sector. 

The final euro zone HCOB manufacturing Purchasing Managers' Index declined to 43.4 in September from 43.5 in the previous month.

The reading below 50 indicated contraction, and the latest survey showed demand declined at the fastest pace since record keeping began in 1997.  

A separate survey showed that the UK's manufacturing sector continued to face weakening activities in September. 

The seasonally adjusted S&P Global/CIPS manufacturing purchasing managers' index edged slightly higher to 44.3 from 39-month low of 43.0 in August. 

Manufacturing sector outlook remained weak because of weak demand from domestic and foreign customers.

Job market conditions remained tight in the Euro Area and the jobless rate declined to the lowest level since record keeping began in 1995. 

The seasonally adjusted jobless rate in the Euro Are decreased to 6.4% in August from the upwardly revised 6.5% in July, Eurostat reported Monday.  

Jobless rate in August a year ago was 6.7%. 

The number of unemployed people decreased by 107,000 from the previous month to 10.856 million. 

Of the four large economies in the Euro Area, Germany recorded the lowest jobless rate of 3% and Spain led with the highest rate of 11.5%. 

Jobless rate in Italy and France was 7.3%. 

Meanwhile, the youth unemployment rate, jobless rate among jobseekers 25 years and younger, edged down to a record low of 13.8% in August 2023, from 13.9% in July. 

 

Europe Indexes & Yields

The DAX index decreased 0.2% to 15,360.30, the CAC-40 index eased 0.3% to 7,117.18 and the FTSE 100 index fell 0.4% to 7,579.41.

The yield on 10-year German bonds increased to 2.87%, French bonds traded higher to 3.43%, the UK gilts edged up to 4.47% and Italian bonds rose to 4.78%.

The euro edged lower to a three-month low to $1.05, the British pound to $1.21 and the U.S. dollar fetched 91.41 Swiss cents.

Brent crude increased $0.91 to $93.11 a barrel and the Dutch TTF natural gas edged higher by €1.66 to €40.20 per MWh.

 

Europe Stock Movers 

Banco Bilbao Vizcaya Argentaria, S.A. increased 1% to €7.79 after the Spanish bank received an approval from the European Central Bank for its stock repurchase program of up to €1 billion. 

BAE Systems Plc added 0.9% to 1,006.50 pence after the company won a £4 billion submarine contract from the UK government as a part of the AUKUS program with the U.S. and Australia to build attack submarines. 

United Utilities Group Plc gained 1.8% to 965.20 pence after the company reiterated its outlook for the year ending in March. 

Deutsche Bank AG decreased 1% to €10.34 after local news reports suggested that the German financial regulator has appointed a special monitor to oversee the company's handling of customer service problems at its unit Post Bank.

Allianz SE declined 0.3% to €224.20 and the company extended the tenure of Oliver Bates as chief executive and chairman of the board. 

Melrose Industries Plc decreased 0.5% to 466.70 pence after the company launched its £500 million stock repurchase program. 

Pennon Group Plc jumped 3.7% to 607.75 pence after the water and waste water management company said business performance is in-line with management expectations in the first-half ending in September.