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Detroit continued to lead the nation’s cities of 1 million people or more with the highest unemployment rate in September, according to government figures released Wednesday.

And for Detroit’s painful unemployment rate to stabilize and eventually decline, economists say the jobless will just have to leave the Motor City.

The Labor Department said the metro area ravaged by the auto industry’s collapse reported a 17.3% jobless rate in September, up from 17% in August, and 8.9% last year.

Detroit also recorded the largest jobless rate increase from September 2008 with 8.4 percentage points, followed by Muskegon-Norton Shores, Mich., at 6.8 percentage points.

"Detroit’s labor market situation has deteriorated substantially from what was already a weak level," said John Lonski, a chief economist at Moody’s Economy.com.

He said that the suffering experienced by Detroit’s big three automakers — Ford (F, Fortune 500), General Motors and Chrysler — than what overall auto industry experienced, the slowest pace of auto sales since the 1960’s.

"The only way to contract the city’s unemployment rate is through migration," Lonski said. "The jobs that were lost aren’t coming back like they will in other cities after the downturn, so the unemployed individuals will have to go elsewhere to find jobs, and that will help shrink Detroit’s overall workforce."

The structural challenges and the shrinking of the auto giants in Detroit will force the entire city to downsize, Lonski said, as opposed to other areas where the housing market took a toll on unemployment but is bouncing back.

One place Lonski says Detroit’s jobless should consider relocating to is Texas, second to California as the most populated state and with an unemployment rate below the national average of 9.8%. Texas’ major metropolitan areas also boast relatively lower rates, with San Antonio at 7.1%, Austin at 7.2%, Dallas at 8.3% and Houston at 8.5%, according to the government report.

Optimism beyond

Despite the crisis in Detroit, severe unemployment eased overall in the nation’s metropolitan areas even while the nation’s unemployment rate climbed to a 26-year high in September payday advance online.

The report said 117 of 372 metropolitan areas surveyed suffered unemployment rates of at least 10% last month, down from 129 cities in August. The number of areas with unemployment rates higher than 15% fell to 13 in September from 16 metro areas in August.

The national unemployment rate rose to a seasonally adjusted 9.8% in September. Economists surveyed by Briefing.com expect that national rate to rise to 9.9% when the Labor Department releases its October jobs report on Nov. 6.

Overall, 133 cities in the Labor Department report had unemployment rates above the non-seasonally adjusted national figure of 9.5%, while 232 reported jobless rates below it, and 7 areas had the same rate.

Three areas in Michigan posted jobless rates higher than 15%, including Detroit.

Among other cities with populations of at least 1 million, California’s Inland Empire, including Riverside, San Bernardino and Ontario, ranked second to Detroit with an unemployment rate of 14.2% in September.

El Centro, Calif. continued to have the highest unemployment rate of any metropolitan area at 30.1%, down from a revised 33.1% in August.

The second highest rate was in Yuma, Ariz. at 24.2%, a slight drop from 26% in August. Both El Centro and Yuma are cities near agricultural areas where extreme heat impacts the workforce, the Labor Department said.

The metro areas with the lowest unemployment rates in September were all in North Dakota, with Bismarck at 2.9%, followed by Fargo at 3.7% and Grand Forks at 3.8%.

Large cities with the lowest jobless rates were Oklahoma City, at 5.9%, and the Washington, D.C., metro area at 6.2%.

A southern Louisiana metro area that includes Houma, Bayou Cane, and Thibodaux was the only one to experience a year-over-year declining jobless rate because it was impacted by Hurricane Gustav in September 2008.  

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Bank of France Governor Christian Noyer was appointed to a second term by President Nicolas Sarkozy, extending his tenure on the Governing Council of the European Central Bank.

The six-year appointment was confirmed by Luc Chatel, Sarkozy’s spokesman, following a meeting of the French Cabinet today. The mandate begins on Nov. 1 and cannot be renewed again.

Noyer, 59, helped the French government craft its response to the economic crisis, including the bailout of Franco-Belgian lender Dexia SA and financial support for banks including BNP Paribas SA and Societe Generale SA. Now he will have a hand in steering the French and European exits from recessions, while overseeing the implementation of new rules for French banks.

“Changing governors now in such a turbulent period would have been a bad sign,” said Pierre-Olivier Beffy, an economist at Exane BNP Paribas in Paris. “Noyer is a very prudent voice who has highlighted the continuing fragility of the financial system. He’ll ensure the stimulus exit isn’t too hasty.”

Banks must keep up reforms and strengthen their balance sheets, Noyer said earlier this week savings account payday advance. Referring to “impressive quarterly profits” reported by some institutions this month, he advised restraint on dividend payouts and executive compensation.

“It is striking that these performances were achieved only a few months after some of those same institutions came very close to failure,” Noyer said in an Oct. 26 speech in Singapore. “This might give the impression that the financial sector has recovered its balance and that no further reforms are necessary. Nothing could be further from the truth.”

Noyer is a career government official and a graduate of l’Ecole Nationale d’Administration, France’s elite school for civil servants. He rose through the Finance Ministry and was director of the French Treasury from 1993 to 1995.

Noyer was vice president of the ECB from 1998 to 2002 under Wim Duisenberg before replacing Jean-Claude Trichet at the Bank of France in 2003. Trichet is currently the ECB President.

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Norges Bank will probably raise its benchmark interest rate tomorrow, becoming the first European central bank to reverse monetary support measures as policy makers steer the oil-rich economy through its recovery.

The Oslo-based bank will lift the overnight deposit rate by a quarter point to 1.5 percent, the first increase in more than a year, according to 19 out of 20 economists surveyed by Bloomberg. The other forecast an increase to 1.75 percent. The bank will announce its decision at 2 p.m.

The world’s fifth-largest oil exporter came out of recession in the second quarter after investment in its petroleum industry, a stimulus package equivalent to 4.7 percent of gross domestic product and record-low borrowing costs fueled domestic demand. Prime Minister Jens Stoltenberg, whose coalition government was re-elected last month, has pledged to raise next year’s spending in excess of national fiscal guidelines even after recovery took hold.

“They are going to raise this month and I think they will raise interest rates to about 4 percent by the end of next year,” said Sunil Kapadia, an economist at UBS AG in London.

Housing, Inflation

The only Scandinavian country outside the European Union needs higher borrowing costs to offset the effect of government stimulus. The registered unemployment rate dropped to 2.7 percent in September, Europe’s lowest, and annual retail sales have grown for three consecutive months. House prices, not taking inflation into account, have returned to their pre-crisis peak from the summer of 2007, the Finance Ministry estimates.

Inflation has hovered close to the bank’s 2.5 percent target and was 2.4 percent last month, adjusting for the effect of taxes and energy. This year, the rate has exceeded the central bank’s target in six out of nine months.

“Better consumer confidence and strong government stimulus are contributing to a quicker recovery than expected,” Bjoern- Roger Wilhelmsen, senior economist at First Securities ASA in Oslo, said in a note to clients.

The krone was little changed at 8.3664 at 8:42 a.m. in Oslo. The krone has gained 7.9 percent since the end of June, making it the second-best performer of the 16 major currencies tracked by Bloomberg in the period after the New Zealand dollar.

Gains in the krone will limit the scope of rate increases, according to DnB NOR ASA, as policy makers try to balance the needs of the domestic economy against the task of supporting the country’s exporters.

Struggling Exporters

“The export sector is still struggling and a stronger krone will only weaken the sector further,” said Maren Romstad, a currency strategist at DnB NOR ASA, Norway’s biggest bank. This “will limit the room for the central bank to hike.”

Erik Bruce, Oslo-based senior economist at the biggest Nordic lender, Nordea Bank AB, expects the central bank to move “gradually,” and increase rates at every second meeting to 2.75 percent within 12 months. “They will move much more cautiously.” If the bank “moves too fast, we will surely see an even stronger krone and that will lead to a too tight monetary situation, too low inflation.”

Former Finance Minister Kristin Halvorsen on June 22 warned mortgage holders against basing home purchases on an assumption that interest rates will remain at the current record low. Central bank Governor Svein Gjedrem said on Sept. 30 that asset prices “have risen sharply and probably excessively,” characterizing policy rates as “extremely low.”

‘Warning Shot’

A rate increase tomorrow will be “like a warning shot,” Kapadia said. “They will start raising rates and try and encourage people to be a bit more cautious in their borrowing. I think it is the right thing to do.”

The country’s oil wealth has shielded it from the worst of the economic crisis, and mainland gross domestic product, which excludes oil, gas and shipping, grew 0.3 percent in the second quarter, ending six months of recession. The government expects the economy to grow 2.1 percent next year after contracting 1.1 percent this year. The jobless rate will average 3.2 percent this year and 3.7 percent in 2010.

After spending a record amount of its oil wealth this year to jolt the economy out of a trade-led recession, the government on Oct. 14 announced plans to spend even more in 2010. It will transfer 148.5 billion kroner from its $450 billion oil fund to cover the so-called structural non-oil budget deficit.

Exceeds Limit

Norway, which is also the world’s second-largest natural gas exporter, puts most of its revenue from oil and gas in a pension fund that invests abroad to avoid stoking inflation in the domestic economy. The Government Pension Fund - Global is Europe’s largest equity investor.

Expenditure guidelines stipulate the government should limit spending to the expected return of the fund, which is estimated at 4 percent. In 2010 the government will exceed the spending limit by 44.6 billion kroner, overspending for a second consecutive year.

A Norges Bank rate increase would make it the third central bank to raise rates since the global credit crisis started to ease after the Bank of Israel lifted its lending rate a quarter point in August and Australia’s Reserve Bank raised its overnight cash target rate by 0.25 point earlier this month. The bank will also publish a new set of forecasts for the economy and interest rates.

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Europe’s manufacturing expanded for the first time in 17 months and services industries grew at a faster pace in October as evidence mounted that the global economy is pulling out of the recession.

An index of manufacturing increased to 50.7 from 49.3 in September and a services gauge rose to 52.3 from 50.9, London- based Markit Economics said today. Both indexes topped economist forecasts, and the factory gauge climbed above 50, indicating expansion, for the first time since May 2008. German business confidence rose to a 13-month high, a separate report showed.

European companies are stepping up output to meet reviving orders after governments around the world spent $2 trillion in stimulus measures to fight the worst recession in six decades. The International Monetary Fund said on Oct. 1 that the global economy will expand at a faster pace than previously expected in 2010. The euro’s strength may curb the recovery in Europe.

“The second half of the year will be relatively strong,” said Juergen Michels, chief euro-area economist at Citigroup in London. “Looking ahead, there are a lot of reasons for momentum to weaken partly because of a stonger euro.”

The world economy will shrink 1.1 percent this year, less than the 1.4 percent projected in July, the Washington-based IMF forecast. In 2010, the economy may expand 3.1 percent instead of a previously projected 2.5 percent, the fund said. In the euro region, the economy probably returned to growth in the third quarter, the European Commission forecast last month.

Services Industries

A composite index of manufacturing and services industries in the euro-area economy rose to 53 from 51.1 in September, Markit said in today’s report. That was the highest since December 2007 and above the 51.6 that economists had projected in a Bloomberg survey.

Manufacturing in Germany, Europe’s largest economy, expanded in October for the first time in 15 months, Markit said. German business sentiment improved to the highest since September 2008, the Ifo institute in Munich said today in a separate report, citing a survey of 7,000 executives.

Adding to signs of global recovery, confidence in the world economy rose for a third straight month in October, a Bloomberg survey of users on six continents showed earlier this month. In the U.S., industrial output increased more than expected in September and China’s manufacturing expanded at the fastest pace in 17 months.

Monthly Record

Wolfsburg, Germany-based Volkswagen AG, the biggest overseas carmaker in China, sold 150,000 cars in September, a monthly record, as sales for the first nine months surged 37 percent. Hermes International SCA Chief Executive Officer Patrick Thomas said on Oct. 8 that luxury-goods brand sales are “booming” in China and elsewhere in Asia, while the U.S. market has turned “slightly positive.”

Data across Europe today showed some economies are recovering better than others. While French consumer spending rose in September for the first time in three months, the U.K. economy unexpectedly contracted 0.4 percent in the third quarter, separate reports showed.

The European Central Bank has cut its key rate to a record low of 1 percent and started buying as much as 60 billion euros of covered bonds to stimulate bank lending and boost investments and consumption. ECB President Jean-Claude Trichet said on Oct. 9 that it is “not the time to exit yet” with the economy expected to show a “rather uneven” recovery.

Seven Months

The euro has appreciated 18 percent against the dollar since February to a 14-month high above $1.50, making the region’s goods less competitive abroad. In the year’s first seven months, euro-area exports to the U.S., the region’s second-largest trading partner, dropped 20 percent from a year earlier, data showed on Oct. 16. Shipments to the U.K. fell 26 percent and exports to China dropped 4 percent in that period.

“Exchange-rate movements make policy makers sweat,” Marco Annunziata, chief economist at UniCredit Group in London, said in an e-mailed statement. “The euro is already at historically strong levels and will start hitting the recovery at its most fragile juncture, six to nine months from now.”

Siemens AG, Europe’s largest engineering company, has had a “tough” year on slumping orders, Chief Financial Officer Joe Kaeser said last month. ArcelorMittal, the world’s largest steelmaker, said markets for metal in the U.S. and Europe won’t “normalize” next year and Chinese growth will slow.

Euro-area unemployment rose to 9.6 percent in August, the highest in more than a decade, and the IMF last week forecast it will reach 11.7 percent next year, higher than in the U.S. or the U.K. While there are “encouraging signs” of a recovery, the world economy remains fragile and labor markets are yet to improve, the Group of Seven ministers and central bankers said on Oct. 3.

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Bank of Canada Governor Mark Carney’s threat of action to stem gains in the nation’s currency may only have a fleeting influence on currency traders, analysts said.

Carney said yesterday that investors lost their “focus” on the central bank’s commitment to meet a 2 percent inflation target, and said action to weaken the Canadian dollar is an “option.” Hours later, Citigroup Inc. and MF Global Canada Co. said investors should keep buying the currency.

“We believe the Canadian dollar vulnerability should prove fleeting,” after Carney’s remarks, Citigroup strategists Todd Elmer in New York and Michael Hart in London wrote in a note to clients. “Canadian data is consistently surprising on the upside and Canada’s fiscal position is better than that of its peers.”

The recommendations widen a split that began in June when Carney first said the currency’s rise was a risk to inflation and economic growth. The main tool to influence the economy and currency has been exhausted after he cut his key interest rate to a record low 0.25 percent in April.

“Carney is basically issuing a challenge to the market to defy his desire for a certain level for the Canadian dollar,” said Aaron Fennell, a Toronto-based futures and currency broker at Lind-Waldock, a unit of MF Global Canada. “Mark Carney talking the U.S. dollar down is nothing more than an excellent buying opportunity.”

Repeated Promise

The Canadian currency, nicknamed the “loonie” for the bird on the dollar coin, depreciated 0.4 percent to C$1.0474 per U.S. dollar in Toronto yesterday, from C$1.0429 on Oct. 21. It has fallen 1 percent this week after the bank repeated a promise to keep its main rate unchanged through June 2010 and said the currency could “more than offset” other recent signs of economic growth.

The loonie has appreciated 16 percent this year, making the country’s shipments of automobiles, lumber and metals to the U.S. less competitive. The stronger currency restrains inflation by making imports cheaper.

“Markets should take seriously our determination to set policy to achieve the inflation target,” Carney told reporters in Ottawa yesterday, when asked if traders are contemplating the chances of central bank intervention. “Markets sometimes lose their focus; we don’t lose our focus.”

The Bank of Canada said that strength in the currency appears “to have been increasingly driven” by U.S. dollar weakness. It also raised its assumption for where the Canadian dollar will trade through 2011, to 96 U.S. cents, from 87 U.S. cents forecast in July.

‘Credibility at Stake’

“I think the odds of a foreign-exchange intervention are so far out of the money that the Bank of Canada has put a little credibility at stake,” said Sebastien Galy, a currency strategist in New York at BNP Paribas.

The central bank last acted to influence the Canada-U.S. exchange rate in 1998. The currency rose to a record high of 90.58 Canadian cents to the U.S. dollar in November 2007.

“Every other time we heard rhetoric, the market hasn’t paid attention to it,” said John Curran, a Toronto-based senior vice president at CanadianForex Ltd., an online foreign- exchange dealer. “They would have to dust off their dealing machines since they haven’t intervened in 10 years.”

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Unemployment rose in 23 U.S. states in September and hit records in Nevada, Rhode Island and Florida.

Nevada’s jobless rate, at 13.3 percent, was the second- highest among U.S. states behind Michigan, the Labor Department said today in Washington. Unemployment in Rhode Island reached 13 percent, and Florida’s rate climbed to 11 percent, the highest since data began in 1976.

Mounting unemployment is hurting state budgets by cutting tax revenue and boosting benefits to fired workers. Joblessness nationally will reach 10 percent this quarter, a Bloomberg News survey of economists showed this month, indicating consumers will probably not lead a recovery from the recession.

“There is still scant evidence of hiring,” said Marisa Di Natale, a director at Moody’s Economy.com in West Chester, Pennsylvania. “We expect the unemployment rate in most areas to continue rising despite fewer job cuts,” she said.

The number of states with at least 10 percent unemployment held at 14 last month. The jobless rate nationally reached a 26-year high of 9.8 percent in September, the Labor Department reported earlier this month.

Unemployment in the District of Columbia also exceeded 10 percent for a fifth consecutive month, rising to 11.4 percent from 11.1 percent.

Michigan Unemployment

Michigan continued to lead the nation in joblessness, with a rate of 15.3 percent in September, up from 15.2 percent.

The depressed labor market in the state reflects Michigan’s dependence on the auto industry, said Timothy Bartik, a senior economist with the W.E. Upjohn Institute in Kalamazoo, Michigan, a non-profit labor-research group.

“Any state that specializes in a particular industry, when that industry tanks, it’s very hard to offset in any five- or 10-year period.”

New York City’s unemployment rate reached a 25-year high of 10.3 percent in September, the state’s Labor Department reported last week. The rate was 10.2 percent in August and 6 percent in September 2008. The state’s jobless level held at 8.9 percent.

New Jersey, Connecticut

New Jersey’s rate rose to 9.8 percent, the highest level since 1977, from 9 no fax payday loan.6 percent, the state’s Labor Department said Oct. 14. Joblessness in Connecticut climbed to 8.4 percent, also the highest in 32 years, from 8.1 percent, according to the U.S. Labor Department.

“The economy right now is very bad,” said Ireita Kante, 52, of Atlanta, who lost her restaurant management job this month. “I do have confidence we will turn around. We have to. We are a strong country.”

Georgia’s unemployment rate held at 10.1 percent.

Payrolls fell last month in 43 states and the District of Columbia, today’s report showed. New York showed the biggest drop with an 81,700 decrease. The decline reflected a 63,400 drop in government payrolls, which the state said was caused by the expiration of the summer youth employment program.

Texas followed with a 44,700 drop in payrolls and California was next with a 39,300 decrease.

Round Rock, Texas-based Dell Inc., the world’s second- largest maker of personal computers, is among companies still paring staff to cut expenses. Dell said this month it will shutter a North Carolina factory with 905 employees by January. The job cuts are part of the company’s objective of saving $4 billion a year in costs as demand for computers declines.

Cutting Costs

“We set out a pretty big cost goal for ourselves,” Michael Dell, chief executive officer of the Round Rock, Texas- based company, said Oct. 14, a week after announcing the closure of the PC factory. “It’s looking like the $4 billion is quite achievable.”

Over the last year, California showed the biggest loss of jobs, with payrolls falling by 732,700 workers, more than twice Florida’s 360,400 decrease that was the second-biggest.

Payrolls in the world’s largest economy fell by 263,000 last month, more than forecast, the Labor Department reported earlier this month. The U.S. economy has lost 7.2 million jobs since the recession started in December 2007, the most of any downturn since the Great Depression.

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Japanese Finance Minister Hirohisa Fujii said the government may have to sell more bonds this fiscal year to make up for a shortfall in tax revenue.

Tax receipts may drop below 40 trillion yen ($442 billion) in the year ending March 31, compared with the 46 trillion yen forecast, Fujii said at a news conference in Tokyo today.

Fujii said it’s too early to determine the amount of debt to be sold this year. The government in April estimated it would issue 44 trillion yen in new bonds.

He said the government didn’t plan to use money frozen from the current year’s supplementary budget to plug the revenue shortfall. The finance minister said last week that the government will suspend 2.9 trillion yen from the extra budget and decide how to reallocate the funds when it compiles its economic outlook in December.

Fujii mentioned the likely drop in tax revenue in an interview with the Nikkei newspaper published earlier today. The newspaper said the decline in receipts meant the government would have to increase bond sales to a record 50 trillion yen.

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European Central Bank President Jean-Claude Trichet, Jean-Claude Juncker, who heads the group of euro-area finance ministers, and European Union Monetary Affairs Commissioner Joaquin Almunia will travel to China before year end to discuss the yuan’s exchange rate, Juncker said.

“I will go with Mr. Trichet and Mr. Almunia to China before the end of the year,” Juncker told a press conference today in Luxembourg, where he serves as premier and Treasury minister. “This is an initiative I started two years ago.”

Trichet, Almunia and Juncker went to Beijing in November 2007 to push Chinese leaders for a faster “pace of appreciation” of the yuan, a plea that was rebuffed at the time by Premier Wen Jiabao.

China halted the yuan’s gains against the dollar in July 2008 after allowing it to appreciate 21 percent over the previous three years. That left the euro 10.6 percent higher versus the yuan over the previous 12 months as the European currency appreciated against the dollar.

The euro has depreciated 5.4 percent against the yuan since November 2007. That decline is smaller than those of the dollar and the British pound, which fell 8.4 percent and 28 percent versus the yuan, respectively, during the period.

European and U.S. policy makers have started pressing China and other emerging nations to shoulder more of the burden as exchange rates adjust to a rebalancing of the global economy.

‘Lack of Flexibility’

The U.S. Treasury Department yesterday criticized China for the “lack of flexibility” in the yuan and a buildup of foreign-exchange reserves, which “risk unwinding some of the progress made in reducing imbalances.”

Trichet said on Oct. 5 that some emerging economies must allow their currencies to strengthen against the euro and the dollar and said yesterday that excess foreign-exchange volatility is “an enemy” of global economic stability.

While two years ago the trio’s pleas were rebuffed by Chinese officials who said the yuan would enjoy greater flexibility only over time, this time their efforts may be more fruitful. China’s yuan forwards had the biggest weekly gain in more than six months on speculation the central bank will allow appreciation as exports and inflation pick up.

China’s foreign-exchange reserves, the world’s largest, surged to a record $2.27 trillion at the end of September.

Trichet also has had to grapple with an 18 percent surge of the euro against the dollar since March, which threatens to damp euro-area exports and curb the nascent recovery in the economy of the 16 nations using the euro. European exports fell 5.8 percent in August, the most in seven months, data showed today.

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European industrial output rose for a fourth month in August, led by consumer durable goods, adding to signs the euro-area economy is emerging from the deepest recession since World War II.

Production in the economy of the 16 nations using the euro increased 0.9 percent from July, when it gained 0.2 percent, the European Union’s statistics office in Luxembourg said today. Output of durable goods such as washing machines jumped 5.3 percent, the biggest gain since the data began in 1990. From a year earlier, August output fell 15.4 percent, the slowest annual drop in eight months.

The global economy is gathering strength after central banks cut interest rates to near zero and governments pledged $2 trillion in stimulus measures. The European Central Bank last week kept borrowing costs at a record low and ECB President Jean-Claude Trichet said the euro-area economy is recovering “at a gradual pace.” Exports from China, the world’s fastest growing major economy, fell at the slowest pace in nine months in September, data showed today.

“Manufacturing surveys continue to paint a rosy picture of the near-term outlook,” said Carsten Brzeski, an economist at ING Groep NV in Brussels. “The industrial recovery will continue but, of course, no recovery follows a straight upward line. New setbacks are likely.”

Potential Growth

The International Monetary Fund said on Oct. 3 that it expects the euro-region economy to shrink 4.2 percent this year before expanding 0.3 percent in 2010. While the crisis has hampered Europe’s medium-term economic outlook, potential growth should return to its historic trend in most of the region’s advanced economies, the Washington-based IMF projected.

Adding to evidence of recovery is gaining steam, confidence in the world economy increased for a third month in October amid gains in manufacturing and equities, a Bloomberg survey of users on six continents showed today. The Bloomberg Professional Global Confidence Index rose to a record 61.7.

Confidence in the European economic outlook improved to a one-year high last month and a gauge of euro-area manufacturing and services industries showed a stronger expansion than initially estimated. German business confidence is at a 12-month peak. European imports from China rose last month to the highest value since that nation’s export collapse began in November, the Chinese customs bureau said today.

Leipzig Factory

Bayerische Motoren Werke AG, the world’s largest maker of luxury cars, is among companies stepping up output on reviving demand. The Munich-based company has boosted production at its Leipzig factory to a record 730 cars a day from 600, Harald Krueger, BMW’s personnel chief, said in an interview on Oct. 7.

“There is no short-time work at any of the auto-assembly plants in Germany,” Krueger said.

European output of capital goods such as factory machinery rose 1.1 percent from July, when it fell 1.6 percent, today’s report showed. Energy production increased 0.5 percent after a 0.1 percent gain in the prior month.

A recovery may remain too fragile to encourage companies to hire workers. Europe’s unemployment rate rose to 9.6 percent in August from 9.5 percent in the previous month. That was the highest since March 1999.

Volkswagen AG, Europe’s largest carmaker, said on Oct. 8 that the worldwide automotive market won’t return to pre- recession levels before 2013. Chief Executive Officer Martin Winterkorn said the Wolfsburg, Germany-based company will still face a “very difficult year” in 2010. ArcelorMittal, the world’s largest steelmaker, said last month that “markets are not expected to normalize in Europe and the U.S. in 2010.”

Covered Bonds

The Frankfurt-based ECB has offered banks unlimited cash over 12 months and purchased covered bonds to encourage lending. Trichet said on Oct. 9 that it is “not the time to exit yet.” ECB council member George Provopoulos said earlier this month that it will be a “challenge” to choose the right time to withdraw stimulus measures.

An 8.8 percent gain by the euro against the dollar over the past five months is threatening to curb the recovery by making European exports less competitive. Trichet said last week that U.S. authorities’ preference for a strong dollar is “extremely important in the present circumstances.” The euro traded at $1.4898 at 3 p.m. in London, up 0.3 percent on the day.

“In the current beginning of a very fragile recovery, the ECB is becoming increasingly aware that a stronger euro must be absolutely avoided,” said Aurelio Maccario, chief euro-area economist at UniCredit Group in Milan. “A strong euro is another solid argument in favor of our view of a refinancing rate stuck at 1 percent throughout 2010.”

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There’s no easy way to deal with the question of institutions whose failure might pose a threat to the financial system, said Oliver Williamson, co-winner of this year’s Nobel Economics Prize.

“There is no silver bullet,” Williamson, 77, said at a news conference yesterday at the University of California at Berkeley, where he is professor emeritus. “There is no instant answer that I or any of my students or any of my colleagues would be prepared to advance on that.”

Williamson is a founder of organizational economics — the study of how institutions are created and developed and how they affect growth. In research that may have applications to the financial crisis, he suggested that it is better to regulate large companies than to try to break them up or limit their size.

The administration of President Barack Obama has proposed giving the Federal Reserve responsibility for overseeing financial institutions deemed “too big to fail.”

Williamson shared this year’s Nobel prize with Elinor Ostrom, a political scientist at Indiana University in Bloomington and the first woman to receive the economics award no fax pay day loans.

“There’s a possibility we could foresee some of the hazards,” such as those in the current crisis, and “take advance action,” Williamson said. The Fed and Treasury Department face “important organizational issues” similar to those raised by his work. Still, he said, he doesn’t think the crisis influenced the Nobel committee’s decision to award him the prize.

Williamson called himself “a lucky guy.”

In his academic work, Williamson found that large corporations exist primarily because they are efficient and benefit owners, workers, suppliers and customers, the Royal Swedish Academy of Sciences said today in Stockholm.

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