In its monetary policy meeting last week the Federal Reserve left its interest rates unchanged, as anticipated, strengthening expectations for a rate hike next month. It said “the committee judges that the case for an increase in the federal funds rate has continued to strengthen, but decided, for the time being, to wait for further evidence of continued progress toward its objectives.”

Officials said that as long as inflation is on track to reach the two per cent target the Fed will raise interest rates at its December meeting. The central bank said that the rate of price gains “has increased somewhat since earlier this year” and that market-based inflation compensation calculations “have moved up”.

In the meantime, data released by IHS Markit showed that eurozone manufacturing growth improved more than originally estimated in October to the highest level in almost three years. The Purchasing Manager’s Index (PMI) for the eurozone’s manufacturing sector, which is based on a survey of 3,000 companies, rose to 53.5 in October from 52.6 in September. This was above the preliminary estimate of 53.3. A reading exceeding 50 signals expansion in the sector. The increase was led by Germany, while France recorded its first rise in factory activity in eight months. Greece was the only country from those surveyed that recorded a drop in activity.

Finally, in Germany, unemployment declined for the second straight month in October, signalling underlying strength of Europe’s largest economy. The Federal Labour Agency showed that, when adjusted for seasonal factors, the unemployment rate fell by 0.1 per cent from 6.1 per cent in the previous month to 6.0 per cent in October. The number of unemployed people fell by 13,000 from the previous month to 2.662 million, while economists had projected a decline of 1,000. The unemployment rate of 6.0 per cent marks the lowest level since West and East Germany reunited in 1990 after the fall of the Berlin Wall the previous year.

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