May: +3.8% m/m, +22.7% y/y
MNI median: +0.2% m/m
MNI range: -0.5% to +0.6% m/m
April: +0.6% m/m (revised from +0.9%)
March: +4.9% m/m (revised from +5.1%)
February: +3.5% m/m (revised from +2.6%)
January: -1.4% m/m (revised from -1.3%)
December: -0.5% m/m (revised from +1.8%)
—
PARIS (MNI) – Eurozone industry orders rose far more than expected
in May, with strong gains across the board led by capital goods and
consumer non-durables, Eurostat said Thursday.
Taking into account the mostly downward revisions for previous
months, the 3.8% surge in May left orders 22.7% higher on the year.
While order levels were still some 15% below highs seen before the
financial crisis, the recovery over the past year has remained quite
dynamic: orders in April-May were 7.0% above the 1Q average, which was
up 3.4% from 4Q.
A rebound in orders for heavy transport equipment, which are often
quite volatile with little immediate impact on output, accentuated the
monthly leap. Excluding this category, industry orders rose only 2.6% on
the month and were 22.4% higher on the year.
Total capital goods orders spiked 5.3% in May after a modest
setback in April, giving a 20.7% rise on the year. Demand for
intermediate goods orders, which had spearheaded the rebound in demand,
gained another 1.4% and was 30.2% higher on the year.
Orders for consumer durables and non-durables rose 2.9% and 4.0% on
the month and were 13.1% and 8.2% higher on the year.
Demand continued to recover in June, producers polled by the
European Commission reported. While their assessment of order book
levels was still somewhat below the long-term average for both total and
foreign orders, firms’ outlook for near-term production remained clearly
above average. The factory PMI poll signaled a further pick-up in July
(57.2 after 55.9).
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
Wednesday.
Among the larger economies, Italy again registered the strongest
gain in May, with a rise of 5.4% that left orders 28.3% higher on the
year. The June factory PMI signaled a recovery in the growth of orders
(55.0 after 53.8 in May), including foreign orders (57.1 after 56.8).
Manufacturers polled by Isae last month also expected a pick-up orders
in the near term.
Orders in Germany slipped 0.2% on the month after two months of
remarkably strong gains, giving a 28.2% annual increase. National data
showed a comparable decline in domestic demand and a much steeper drop
in orders from other Eurozone countries, which was largely offset by
demand from outside the Eurozone.
Germany’s impressive industrial recovery and the rebound in
construction activity after the harsh winter should assure exceptionally
strong GDP growth in 2Q. Manufacturers’ assessment of current activity
continued to improve in June, according to Ifo’s survey. However,
expectations at the six-month horizon have begun to erode from the
four-year high hit earlier this spring, echoing the outlook of financial
analysts polled by ZEW.
In France, orders fell another 0.6% in May after a 3.1% downturn in
April, for a 10.0% rise on the year. National data showed that a
recovery in demand for heavy transport equipment partly offset a steeper
decline in other sectors led by IT, electronics and metallurgy.
The Bank of France’s monthly survey suggested that industry order
growth stabilized in June close to the long-term average. Manufacturers
polled by Insee this month said that total orders had recovered
somewhat, bolstered by the ongoing improvement in foreign demand.
In Spain orders bounced back 3.9% on the month, retracing most of
the setback in April, for a 16.2% increase on the year.
Elsewhere, monthly results were quite mixed, with order gains in
Ireland (+6.8%) and Slovakia (+3.2%) and declines in Greece (-6.1%), the
Netherlands (-6.1%) and Slovenia (-1.9%).
–Paris newsroom +331 4271 5540; e-mail: paris@marketnews.com
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