European Manufacturing Industry Slows Down, Unemployment Remains High

Jean-Claude Trichet, the president of European Central Bank, said on 27th September that there is growing uncertainty over the financial situation, as the growth of the European manufacturing industry slows down while unemployment remains at a 12-year high.

A measure of manufacturing in 16 nations of the Euro region plummeted to 53.7 during September from 55.1 last month, according to Markit Economics in London. Another report says that the rate of unemployment in the region remained at 10.1% in August, which was the highest since June 1998.  The growth of the European services sector has also declined in September.

The European economy appears to be cooling after experiencing the fastest pace of growth in last four years during the second quarter. The European Commission expects a more “moderate” growth during the third and fourth quarters as unemployment affects consumer spending and policy makers intensify austerity measures in an attempt to cut budget deficits.

Howard Archer, who is an economist at London’s IHS Global Insight, said that the growth in the global economy is showing signs of slowing down while domestic demand is expected to be limited in numerous European countries due to tight fiscal policies.

Officials of the European Central Bank will have another policy meeting on 9th October after last month’s decision to extend emergency policies for banks into the next year. Jean-Claude Trichet said in Brussels yesterday that there is a need for “caution”.

On the positive side, Europe’s confidence in the financial outlook improved unexpectedly in September to the highest since Jan 2008.