Saturday 1 December 2012

Moody's downgrades European Stability Mechanism as eurozone unemployment hits record high

Bloomberg reports Moody's move on Friday:

The European Stability Mechanism and European Financial Stability Facility were downgraded by Moody’s Investors Service, which cited a high correlation in credit risk present among the entities’ largest financial supporters.

The ESM was cut to Aa1 from Aaa, while the EFSF provisional rating was lowered to (P)Aa1 from (P)Aaa. Moody’s said in a statement today that would maintain a negative outlook on each.

Economic data from the euro area earlier on Friday had also been negative.

The unemployment rate in the euro area rose to a record 11.7 percent in October from 11.6 percent in September. Inflation slowed though to 2.2 percent from 2.5 percent.

Data on consumer spending in the euro area on Friday were negative. In Germany, retail sales fell 2.8 percent in October. In France, consumer spending fell 0.2 percent in October.

Just outside the euro area, however, UK consumer sentiment improved in November as the GfK NOP consumer confidence index rose to -22, the strongest since May 2011, from -30 in October.

Consumer spending in the US in October, though, was hit by superstorm Sandy, falling 0.2 percent. Income was flat in October.

In another report from the US on Friday, the ISM-Chicago business survey provided a mixed picture. The business barometer rose to 50.4 in November from 49.9 in October but the new orders index fell to 45.3, the weakest reading since June 2009, from 50.6.

No comments:

Post a Comment