German unemployment unexpectedly rose for a second month as seasonal factors combined with economic risks from the Ukraine crisis faltered euro area recovery.

The number of people out of work climbed a seasonally adjusted 12,000 in September whereas economists had forecasted a decline of 2,000.

While an increase had generally been expected, the rise in German unemployment was much more pronounced than anticipated.

The adjusted jobless rate was unchanged at 6.7 per cent, the lowest level in more than two decades.

In the meantime, the German manufacturing Purchasing Managers’ Index fell into contraction at 49.9.

Elsewhere in Europe, investors turned their focus to the euro area’s European Central Bank interest rate meeting held in Naples. The Italian government recently cut its growth forecast for this year and next and pushed back its structural balanced-budget target by a year as the economy remains in recession.

The third biggest economy in Europe now sees GDP shrinking 0.3 per cent this year, compared with an increase of 0.8 per cent predicted in April.

On the other hand, the US economy expanded in the second quarter at the fastest rate since the last three months of 2011 as companies stepped up investment and households boosted spending.

GDP grew at a revised 4.6 per cent annualised rate, up from a previous estimate of 4.2 per cent.

The increase followed a 2.1 per cent decline in the first three months of the year.

This article was compiled by Bank of Valletta for general information purposes only.

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