June: +2.5% m/m, +22.6% y/y
MNI median: +2.8% m/m, +21.2% y/y
MNI range: +1.2% to +4.4% m/m
May: +4.1% m/m (revised from +3.8%)
April: -0.2% m/m (revised from +0.6%)
March: +5.8% m/m (revised from +4.9%)
February: +1.9% m/m (revised from +3.5%)
January: -1.6% m/m (revised from -1.4%)
—
PARIS (MNI) – Eurozone industry orders rose slightly less than
generally expected in June, as another strong rise for capital goods was
offset by declining demand for consumer goods, Eurostat said Tuesday.
Taking into account the large revisions for previous months, the
2.5% gain in June left orders 22.6% higher on the year.
While order levels were still some 15% below pre-crisis highs, the
recovery over the past year has remained quite dynamic: 2Q orders were
7.9% above the 1Q average, which was up 3.2% from 4Q.
A rebound in orders for heavy transport equipment, which are often
quite volatile and have little immediate impact on output, accentuated
the
monthly rise. Excluding this category, industry orders rose only 1.6% on
the month and were 22.5% higher on the year.
Total capital goods orders spiked 5.3% in June after a 4.7%
rebound in May, giving a 22.7% rise on the year. While demand for
intermediate goods orders had spearheaded the recovery, the recent trend
for capital goods is a reassuring sign that industry is heading into an
expansive phase after an initial recovery spurred by restocking.
Indeed, intermediate goods edged up only 0.1% on the month but were
still 29.6% higher on the year, indicating the fastest recovery across
sectors from the depths of the crisis.
Orders for consumer durables and non-durables fell back 1.1% and
1.8% on the month and were 14.2% and 2.5% higher on the year.
Demand continued to expand in July, with Germany again in lead,
producers polled by the European Commission reported. While their
assessment of order book levels was still slightly below the long-term
average for both total and foreign orders, firms’ outlook for near-term
production remained clearly above average, as in previous months.
However, many analysts expect demand to lose steam in the months
ahead. The unwinding of fiscal stimulus may weigh on growth and demand
from China and the US over the course of this year. The French
statistics institute and leading research groups in Germany and Italy
expect industry output growth to slow gradually over the course of the
year.
Within the Eurozone, “weakened confidence and the drag from fiscal
adjustment — accelerated in some parts of the euro area — will be only
partly offset by the recent depreciation of the euro,” the IMF predicted
last month.
Some cooling in demand was signaled by the factory PMI poll, which
showed new orders in August rising at the slowest clip in eight months
(55.0 after 57.7 in July). Output growth returned to the pace seen in
June (57.2) after a pick-up in July (58.7). Still, the average of the
output components for July and August was only 0.8% below the 2Q
average, when Eurozone industry output expanded by a robust 2.5%.
Among the larger economies, Germany registered the strongest gain
in June, with a 3.9% leap that left orders 32.8% higher on the year.
National data showed that nearly all the rise came from export demand,
including a big boost from bulk orders.
Even if the Bundesbank foresees a return to more normal growth
rates in the months ahead, the momentum in demand for German industry
goods should sustain strong growth in 3Q. Manufacturers’ assessment of
current activity rose to a two-year high in July and expectations at the
six-month horizon recovered to a new cyclical high, Ifo’s survey showed.
Despite some slowing, the output and orders components of the August PMI
poll remained quite dynamic at 60.9 and 57.4.
In France, orders bounced back 3.1% in June, giving a 13.3% rise on
the year. National data showed that demand for heavy transport equipment
was the main driver, with other orders up only 0.7% on the month, led by
electronic and IT products and pharmaceuticals.
French industry orders remained at “normal” levels in July,
according to the Bank of France’s assessment of its monthly business
survey. Insee’s sector survey signaled a recovery in recent orders both
at home and abroad. The improvement in domestic orders was concentrated
in the auto and heavy transport branches and flanked by more modest
gains for some semi-finished goods. Stronger foreign demand was seen
mainly for IT and electronic goods.
In Spain, orders rose another 0.3% on the month after a 4.3%
rebound in May, giving a 13.4% increase on the year. Firms’ assessment
of total and foreign orders improved somewhat in July, while remaining
well below average, the Commission’s survey showed. But near-term
production expectations eroded slightly after an upturn in June. The
July factory PMI signaled a recovery in order growth to a three-month
high and a faster expansion in output.
Monthly data for Italy were not released. Manufacturers’ assessment
of orders in July recovered markedly, bolstered by domestic demand,
Isae’s survey showed. While firms’ outlook for demand in the coming
three months improved as well, near-term output prospects were
unchanged. At the same time, more companies said they would shorten
their traditional summer break, while fewer firms intended to extend it.
Elsewhere, monthly results were quite mixed, with strong gains in
Portugal (+2.1%), Slovenia (+3.0%), Greece (+4.3%) and especially the
Netherlands (+8.9%) and declines in Slovakia (-1.3%) and Ireland
(-4.7%). Annual comparisons show Irish orders below previous-year levels
(-5.1%) and double-digit gains everywhere else except for Greece (+1.9%)
and Portugal (+8.1%).
–Paris newsroom +331 4271 5540; e-mail: paris@marketnews.com
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