Growth Stalls in Europe, US Confidence Slips Ahead of Jobs Data

Global markets are navigating a complex mix of trade shifts, sluggish growth, and diverging signals from key economic indicators. In Europe, resilience to US tariffs has helped cushion inflation pressures, yet growth remains stuck near zero while policymakers prepare tougher steel trade defenses. The euro trades sideways as technicals reflect indecision, while across the Atlantic, US factories continue to contract and consumer sentiment weakens on labor market concerns. With nonfarm payrolls expected to show 52,000 new jobs, investors are watching closely for confirmation of underlying economic strength.

ECB Notes Stability, But Europe’s Growth Stalls at 0.1%

Europe’s economy has proven more resilient than expected to US tariffs under President Trump, according to ECB President Christine Lagarde. She credited the EU’s decision not to retaliate with its own tariffs, along with a capped tariff deal at 15%, a stronger euro, and pro-growth measures by governments. These factors helped limit the impact on growth and inflation, while avoiding major supply chain disruptions.

Lagarde noted that the ECB’s rate policy remains “in a good place,” with the key rate held at 2%, and emphasized no commitment to a fixed future path. The euro’s strength has kept imports cheaper and inflation moderate at 2% in August. Meanwhile, US tariffs have weighed more heavily on the US economy, cooling hiring while inflation remains high.

Despite trade resilience, Europe’s growth is still sluggish, at just 0.1% in Q2. Tariffs are expected to shave about 0.7 percentage points from growth through 2025–2027, though EU trade deals, defense spending, and infrastructure investments are providing some support.

EU Moves to Double Steel Tariffs to 50%

The European Union is preparing to raise tariffs on steel imports to 50%, doubling the current 25% duty once quotas are exceeded. The plan would also cut the total quota volume to 18.35 million tons, nearly 44% lower than last year’s levels, with product-specific and country-specific limits designed to prevent steel being rerouted through third countries.

The proposal aims to align the EU’s tariff regime with the United States and address global steel overcapacity, particularly from China. It includes “melt-and-pour” provisions to ensure tariffs apply based on where the steel was originally produced. Reviews are planned every five years from 2031, with an earlier adjustment to product categories within two years.

Europe’s steel industry has been under strain from cheap imports and declining domestic output. Industry groups and producers, including Tata Steel, have pushed for stronger trade defenses, warning that without action key sectors such as automotive, energy, and manufacturing could face long-term risks.

Technical Analysis

Since peaking at 1.19178 on September 17, the EURUSD has eased more than 1.5%, with price action consolidating beneath the 20-period EMA and reflecting a sideways trading environment. Technical signals remain mixed. The Momentum Oscillator has dipped below its 100 baseline, highlighting growing downside pressure, while the RSI continues to hold above 50, indicating that underlying buying interest has not fully dissipated. At the same time, the ADX remains subdued below 25, confirming the absence of a clear directional trend.

From a technical perspective, if consolidation resolves to the upside, immediate resistance levels are seen at 1.18192, followed by 1.19169 and 1.19711. On the downside, a further loss of momentum or a shift in sentiment would bring support into view at 1.16449, 1.15734, and 1.13906. Overall, the pair remains range-bound, with breakout confirmation needed before a sustained directional move can be established.

Production Rebounds, But Factories Remain in Contraction

US manufacturing contracted in September for the seventh consecutive month, with the ISM Manufacturing PMI rising slightly to 49.1 from 48.7 in August, but still below the 50 threshold that signals expansion. Production improved to 51, moving back into growth territory, but new orders fell sharply to 48.9, undermining the outlook. Employment also remained weak at 45.3, despite a modest gain.

Price pressures persisted, with the Prices Index at 61.9, while inventories declined to 47.7. Supplier deliveries slowed (52.6), a sign of modestly improving demand. Export and import orders both contracted further, pointing to continued weakness in global trade.

Overall, 67% of manufacturing GDP contracted in September, with only petroleum and coal products showing strong growth. Eleven industries, including machinery, electronics, and transportation equipment, reported declines, underscoring ongoing challenges for the sector despite isolated areas of strength.

Consumer Sentiment Falls as Labor Worries Grow

US consumer confidence fell in September to a five-month low, driven by growing concerns over job prospects and the broader economic outlook. The Conference Board’s index slipped to 94.2, with present conditions dropping to a one-year low and expectations for the next six months also weakening. The share of consumers saying jobs are plentiful declined to the lowest since early 2021, underlining mounting labor market uncertainty.

Despite subdued sentiment, consumer spending has remained resilient, keeping the economy supported. Homebuying plans picked up on easing mortgage rates, while demand for vacations and major appliances softened. Inflation expectations eased slightly, though job-related worries remain the main drag on confidence. All eyes now turn to today’s US nonfarm payrolls report, which is expected to show an increase of 52,000 jobs, offering fresh insight into the labor market’s strength.

Conclusion

Global markets remain caught between resilience and fragility. Europe has managed to cushion the blow from US tariffs and is preparing stronger trade defenses, yet growth momentum is barely positive. The euro reflects this indecision, consolidating in a narrow range without a clear trend. In the US, manufacturing continues to contract, and consumer confidence has slipped, highlighting concerns over jobs and demand. With today’s nonfarm payrolls expected to show a modest 52,000 job gain, investors will look for confirmation of whether underlying economic strength is holding or if signs of slowdown will deepen into the final quarter of the year.