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Euro inflation stable at 1.8 pct in August, July jobless rate holds steady

Euro inflation stable at 1.8 pct in August, July jobless rate holds steady

Inflation in the 13 countries that use the euro currency should stay at 1.8 percent in August, the European Union's statistical agency said in a first estimate Friday, a week before the European Central Bank decides whether to raise interest rates.
The euro area's unemployment rate for July also held steady at 6.9 percent at a record low as the European economy's recent growth spurt adds jobs.
But business and consumers had mixed feelings about future prospects, with a European Commission survey showing confidence falling to the lowest levels in six months as they were less confident about the euro-zone economy. Industry managers, however, were upbeat about future orders after a dip in the spring and early summer.
Eurostat will give details on the factors behind the inflation figure for August when it confirms the rate on Sept. 14, but the year-on-year rate is below the ECB's guideline of just under 2 percent.
The central bank can raise the cost of borrowing beyond the current 4 percent headline rate if it believes prices are going up too fast and the economy is overheating. But the euro area's relatively low inflation rate is influenced by falling energy prices after an oil price spike last year that may mask higher prices for food.
ECB President Jean-Claude Trichet said Monday that he was not "pre-committed" to raising rates and earlier comments _ interpreted as a hint that the bank would raise rates on Sept. 6 _ had been made before financial markets fluctuated over fears of losses from U.S. subprime mortgages.
Holger Schmieding, chief European economist at the Bank of America, said the new data did not give the ECB a clear reason to back away from a rate rise but it should do so because banks still seem "reluctant to lend to each other for longer than the very short term."
One clear sign that Europe's recovery is spreading is the creation of new jobs in a region where jobless lines are far higher than the United States or Japan.
Eurostat said 16 million people are seeking work in all 27 nations of the European Union, including 10.4 million in the euro zone.
Within the currency area, France topped the poll for the month with a provisional unemployment rate of 8.5 percent, well ahead of the EU's largest economy, Germany, with a provisional rate of 6.4 percent. The Netherlands had the lowest euro rate of 3.4 percent.
Across the entire EU, Slovakia has the highest jobless rate at 10.6 percent. Poland follows at 9.7 percent _ a massive decrease from rates reported last year as many Poles take advantage of new EU rights to seek work in other member nations. Denmark posted the lowest rate in the EU at 3.2 percent.
Looking ahead, the European Commission said consumer confidence slipped in August in both the euro area and the EU, insisting that confidence is still at a very high level.
People were slightly less optimistic about the general economic situation and their own finances over the next year and were more worried about unemployment. Consumer confidence slipped in all large countries except for Britain, it said.
Different groups have different views on how prices will change, the EU's executive arm said.
"Consumers, and to some extent also industry managers, foresee upward pressure on prices, while construction managers adjusted their price expectations downward," it said.
Including different business sectors, however, the economy sentiment weather vane for the euro area slipped to 110 in August from 111 the previous month as the services and construction sectors were more pessimistic. Retailers were slightly more upbeat.
For the EU, the drop was much smaller, from 113.2 in August from 113 in July as services and the retail trade believed they would pick up in coming months, the construction sector seeing no changes.
Another EU survey of industry managers, the business climate indicator, increases slightly to 1.41 in August from 1.35 in July as executives expected order books to rise and were optimistic about recent production trends. There was no change to their assessments of export orders and their production expectations were down slightly.


Updated : 2021-05-14 16:23 GMT+08:00