European Unemployment in August
The unemployment level in the euro area (EA17) rose to 11.4% in August, which matched July’s number. The jobless figure for the broader EU27 was 10.5%. Both figures demonstrate the extent to which recession has gripped the region, as well as the long odds that face Europe as it tries to dig out of a deepening recession. According to EuroStat, Germany continues to have low unemployment at a level of 5.5%. Greece’s unemployment level was at a terribly high 24.4% (Greek numbers cover June). And Spain, the area nation that has had the highest unemployment rates for months, the number was 25.1%.
Eurostat estimates that 25.466 million men and women in the EU27, of whom 18.196 million were in the euro area,were unemployed in August 2012. Compared with July 2012, the number of persons unemployed increased by49 000 in the EU27 and by 34 000 in the euro area. Compared with August 2011, unemployment rose by 2.170 million in the EU27 and by 2.144 million in the euro area.
Fourth-Quarter Fears
A growing number of analysts believe the stock market cannot match its 5% advance in the third quarter. Among the most obvious reasons are worries that the fiscal cliff will slow or reverse hiring among businesses that are concerned about tax increases, as well as a general nervousness about the national economy. Many observers of political behavior in Washington do not expect decisions on taxes or the budget until well into 2013, particularly if one party controls the White House and another either the House or Senate. Add to that consumers who also worry about tax increases and their jobs. Europe will continue to be a factor. On a broad scale, the crisis there is in the news every day, which cannot help confidence in the United States. And most experts believe that the earnings of public companies with large Europe operations and sales will be undercut by the region’s recession, hindering the recovery of America’s export economy. Indices may be at or near all-time highs, but that creates earnings multiples that will be hard to sustain, if even one or two of the concerns about the state of American business come true.
iPhone Maps and Apple Stock
A muting of Apple Inc. (NASDAQ: AAPL) iPhone 5 sales because of trouble with the company’s map software is not built into its stock price. The map technology is so bad that CEO Tim Cook has even publicly apologized. There is at least anecdotal evidence that iPhone buyers have started to download Google Inc.’s (NASDAQ: GOOG) map software and AOL Inc.’s (NYSE: AOL) Mapquest product. The forecast for iPhone 5 sales still runs toward 20 million last month and as many as 47 million before the end of 2012. But consumers are used to perfection from Apple’s new products, and press coverage of the Apple map problem has been universal. It would take only a very small drop in expectations to press Apple’s shares down sharply. Those shares trade at $665, down from a recently reached 52-week high of just above $705, but still up almost 90% over the past year. The air up there may have become harder to breathe.
Douglas A. McIntyre
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