The Euro was weaker against the Pound and the majority of its most traded peers on Tuesday after a number of data releases showed that activity fell and unemployment remained close to record highs in the Eurozone.
The first major European release of the day showed that unemployment increased unexpectedly in Germany, the region’s largest economy. According to the report, unemployment leapt by 9,000 to 2.916 million, worse than forecasts for an expected decline of 10,000. The overall unemployment rate remained steady at 5.1%.
Following on from that came the latest Eurozone Manufacturing PMI data which showed that the region’s manufacturing recovery slowed in June as France produced a particularly poor figure.
Markit’s Eurozone Manufacturing PMI dipped to a seven-month low of 51.8, down from 52.2 in the prior month, a worrying sign. It shows that growth slowed, with the PMI dipping back towards the 50-point mark separating expansion from contraction.
One bright point was that Spain posted its best performance in 84-months. France posted a 6-month low, Greece a 7-month low and surprisingly Austria saw its production dropped to an 11-month low.
“Employment is barely rising in the manufacturing sector as companies worry about waning growth of new orders, which reflects very subdued demand for goods from households and businesses,” said Markit’s chief economist Chris Williamson.
Overall unemployment in the Eurozone remained at 11.6% last month suggesting that the recovery has stalled and no improvements have filtered into job creation. The European Union’s statistics office, Eurostat, said Tuesday the overall number of unemployed workers in the 18 countries that use the euro decreased by 28,000 from the previous month to 18.6 million.
The data concerned investors as it still shows a strong pattern of diverge between the regions northern and southern regions. Germany’s unemployment stayed at 5.1% nations whilst Spain’s remained at 25.1%.
The Pound advanced further beyond the 1.25 level after it found support from the release of data which showed that manufacturing activity in the UK expanded at its fastest pace in seven months in June, boosting optimism over the nation’s economic outlook.
According to Markit, activity increased to a seasonally adjusted figure of 57.5 last month, up from the previous months reading of 57.0. The data was better than expectations for a slight fall to 56.8. The PMI report was the 16th consecutive report to show expansion.
“We expect official manufacturing production to have expanded in the second quarter at a pace above the 1.5% registered in the first quarter, making further headway into recovering pre-crisis output levels,” said Rob Dobson, senior economist at Markit.
UPDATED: 09:45 GMT 02 July 2014
UK News pushes Euro to Pound Down
Early into European trading on Wednesday the Euro to Pound (EUR/GBP) exchange rate touched fresh lows as economists responded to the UK’s latest batch of surprisingly strong data.
Yesterday, the UK’s manufacturing PMI came in above expected levels.
Today, the nation’s construction report also smashed expectations, achieving an impressive reading of 62.6 in June.
In the aftermath of the data’s publication Sterling advanced on the majority of its most traded currency counterparts.
The Euro to Pound exchange rate could experience additional movement as a result of the Eurozone’s producer price index.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3685 ,
Euro,, Pound Sterling,0.7992 ,
Euro,,Australian Dollar,1.4483 ,
Euro,,Canadian Dollar,1.4607 ,
Pound Sterling,,Euro,1.2513 ,
US Dollar,,Euro,0.7306 ,
[/table]
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