Last week's economic indicators were largely dominated by negative unemployment figures on both sides of the Atlantic.

In the US, the week's highlight was on Friday, when the unemployment rate surprised economists when it rose to 9.7% in August, its highest level in 26 years. The Labour Department also revised job losses for June and July to show 49,000 more jobs lost than previously reported. Meanwhile, Eurozone unemployment rose to 9.5% in August, hitting a 10-year high, although this was in line with market expectations. The rise in joblessness was uneven across the 16 member countries of the Eurozone, with the highest increase in Ireland and Spain. The jobless figure had remained static in July, from June's 9.4%.

Manufacturing activity in the Eurozone shrank less than expected as it rose to a level of 48.2 in August from its previous level of 47.9 in July. Eurozone consumer prices fell for the third month running in August, dropping by 0.2% after a steeper 0.7% discount in July. As expected, the European Central Bank left interest rates at a record low of one per cent during its Thursday meeting and hinted later on that interest rate hikes may not be yet on the horizon.

In the UK, manufacturing activity registered a surprise drop which cast doubts on the strength of a quick economic recovery. The headline Purchasing Managers' Index for manufacturing dropped for the first time since February, to a level of 49.7 in August from a downwardly revised 50.2 in July, much less than the 51.5 mark expected by economists.

On a positive note, Britain's services sector grew at its fastest rate in nearly two years in August, rising to a level of 54.1 from its July level of 53.2, boosted in part by firms' optimism and growing hopes of an economic recovery.

Another piece of good news came from the US, where the index of Midwest business activity for August issued by the Institute for Supply Management - Chicago showed an unexpected expansion, hitting the 50 level, well above its previous level of 43.4, and exceeding the 48 level anticipated by economists.

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