Reply #23: European Manufacturing Expands, Unemployment Declines

[Ghost Dog]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aV_jZo1gFf28&refer=worldwide

Dec. 1 (Bloomberg) -- European manufacturing expanded for a 17th month and unemployment declined as executives and consumers became more confident about the economy's strength.

Royal Bank of Scotland Group Plc said today its manufacturing index was at 56.6 in November after October's 57. A reading above 50 indicates growth. The unemployment rate in the euro area unexpectedly fell in October to 7.7 percent, the lowest in more than five years, a separate report showed.

The euro region's economy will start 2007 stronger than anticipated, the European Commission said yesterday. The forecast reinforced speculation that the European Central Bank will continue raising interest rates into next year after a likely increase to 3.5 percent on Dec. 7.

``We can see that growth, not only in industry, but in the whole economy, is still very good,'' said Christoph Weil, an economist at Commerzbank AG in Frankfurt. ``This fits the ECB's view that the economic outlook is good. It fits their growth projection for next year and they have no reason to change it.''

Borrowing by companies and consumers spurred money-supply growth, which the ECB uses to gauge future inflation, to close to a three-year high of 8.5 percent in October.

``We still have abundant liquidity and the recent data on money supply in no way gives us cause to relax,'' ECB Executive Board member Juergen Stark said Nov. 29. The October figures were ``significantly above our reference value.''

The Dow Jones Stoxx 600 Index gained 0.5 percent to 353.46, its second rise this week. The euro was little changed at $1.3242 at 11:39 a.m. in London, after reaching a 20-month high against the dollar yesterday. The yield on the German benchmark two-year note rose 1 basis point to 3.67 percent.

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