Euro-zone Economic Confidence Shows Recovery on the Way

Euro-zone economic confidence in November showed signs of improvement delivering signal that the region is getting on rail of recovery.

Indicator of consumer sentiment rose to 88.8, European Commission figure say. This figures appear to be higher than expected level of 88. Manufacturing and services rose for a fourth straight month spurring up the degree of business activity in 16-nation region.
A better than expected result is mainly driven by ECB`s stimulus programs and its policy of close to zero rates. High unemployment rate and rising Euro are the sources of concern, threatening to slower recovery.

The business activity indicator inclined to -1.56 from revised -1.79 which is higher than the estimated -1.65. European consumer confidence in November rose to -17 better than prior -18 matching expectations. The news affected Forex market investors encouraging them to buy Euros.

Earlier the ECB Chairman Jean-Claude Trichet expressed the idea that the Euro-zone`s recovery will continue growing steadily in 2010. The bank made a decision to buy covered bonds and gave billions of euros to markets within the frames of its emergency programs.

UK Inflation Climbs in October

The inflation rate in the UK climbed higher than experts predicted showing the first rise in last eight months. UK consumer prices rose 1.5 percent compared to 1.1 last months. The experts predicted 1.4 percent rise.

The reasons of such reading are and air fare costs and fuel prices as fuel producers shift their trading terms. However, between September and October the cost of fuel dropped by 0.7 percent.

Prices for second-hand cars, caused by a shortage of stock, rose at the fastest pace pushing up inflation in October, the figures released by the Office for National Statistics showed today. Climbing prices of recorders, games and toys also contributed to inflation.

According to the Bank of England`s growth and inflation forecasts released November, 11, the inflation will not reach 2 percent level until 2012. As the UK economy recovers there are some risks of rise in consumer prices, that is why the Bank of England ties not to withdraw stimulus measures too early and sticks to its low lending rate policy.

Economists Predict Us Jobless Rate to Hit 13% Level

The unemployment rate may shortly rise to 13 percent level, the highest level since World War II, David Rosenberg, an economist at Gluskin Sheff & Associates Inc.

This prediction was made after the US Department of Labor released negative unemployment figures showing that the US jobless rate, one of the most important economic indicators, unexpectedly hit the level of 10.2 percent. David Rosenberg gave an interview to Bloomberg news agency. In this interview he said that “this is going to be the mother of all jobless recoveries.” He also noted: “At the beginning of the year, who was calling for unemployment to go up to 10 percent?”

In the near future joblessness rate has all the prerequisites to reach the 13 percent level. The rate of 13 percent would be the highest since monthly records started in January 1948. Previously postwar maximum was 10.8 percent in 1982. During the Great Depression in 1933 unemployment jumped nearly to 25 percent.

Besides, the under-employment rate, including part-time workers who would prefer a full-time post, and people who would like to work and have given up looking, hit 17.5 percent last month, the maximum reading since records started in 1994.

Significant Losses for BMW, but still Good Prospects

BMW, one of Germany`s leading carmakers reported a slump in earnings for the third quarter as a result of decline in consumer spending.

Net earnings of BMW sank 73.8 percent to 78 million Euros, but the carmaker expects to end the year with profit after signs of recovery emerged. Third quarter figures delivered that sales of Rolls-Royce and Mini BMW brands contracted 7.2 percent. The overall decline in 2009 is now 15.7 percent comparing with a year ago.

Norbert Reithofer, the BMW top manager says that stimulus measures already put in place now start taking effect increasing company efficiency and reducing costs. He predicts moderate recovery over 2010 and security on the car market.

In spite of all losses the board of managers is targeting to achieve positive net profit this year. Usually carmakers do not worsen at the end of the year. Last year BMW sold near 1.43 million vehicles.