Europe Industrial Orders Increase More Than Forecast
22/01/2010 - Bloomberg.com
European industrial orders rose more than economists forecast in November on demand for goods such as steel and car parts.
Orders to industrial companies in the 16-nation euro region increased 1.6 percent from October, when they dropped a revised 1.9 percent, the European Union's statistics office in Luxembourg said today. Economists forecast a gain of 0.5 percent, according to the median of 20 estimates in a Bloomberg survey. In the year, orders dropped 1.5 percent.
European companies are boosting output to meet reviving orders after governments around the globe spent trillions of dollars on stimulus measures. While the World Bank yesterday raised its 2010 global economic forecast, European Central Bank President Jean-Claude Trichet said earlier this month that the euro area is facing an "uneven" recovery this year.
"The industrial recovery remains moderate overall," said Marco Valli, an economist at UniCredit Group in Milan. "Growth momentum in the first half of 2010 will be somewhat slower than in the second half of 2009."
The euro rose today against the dollar, trading at $1.4156 at 10:02 a.m. in London, up 0.5 percent. The yield on the German 10-year benchmark bond dropped 0.1 basis point to 3.32 percent.
The euro-area recovery is already showing signs of losing momentum. Service and manufacturing industries unexpectedly grew at a weaker pace in January, while investor confidence in Germany, Europe's largest economy, fell for a fourth month.
Intermediate Goods
Euro-area industrial orders for intermediate goods including automobile parts and steel rose 1.8 percent in November from the previous month, when they increased 1.5 percent, today's report showed. Orders for non-durable consumer goods advanced 1.2 percent from October, while demand for capital goods declined 1.2 percent. Excluding heavy transport equipment, overall orders gained 1.5 percent.
Companies may rely on faster-growing emerging economies to boost sales this year as rising unemployment and widening budget deficits across the euro region restrain domestic spending.
The Washington-based World Bank said yesterday that the global economy may expand 2.7 percent this year instead of a previously projected 2 percent, led by an Asian rebound. China's growth accelerated to the fastest pace since 2007 in the fourth quarter of 2009, data showed yesterday.
Volkswagen AG, Europe's largest carmaker, on Jan. 11 reported record sales for 2009 with revenue in China surging 37 percent. Paris-based Alstom SA said on Jan. 19 that the quarter through December saw an "improvement" in orders after a "trough" in the previous three months.
Stimulus Measures
The ECB earlier this month kept borrowing costs at a record low of 1 percent to encourage spending. The Frankfurt-based central bank said last month that it will phase out some stimulus measures as the economy recovers.
"It's likely that the first half of 2010 will be somewhat more muted than the second half of 2009," ECB Executive Board member Juergen Stark said on Jan. 20. "But that isn't necessarily a sign of another downswing, or a double-dip, rather more a characteristic of a gradual and bumpy recovery in the coming quarters."
The statistics office previously reported a drop in October orders of 2.2 percent from the previous month. In the 27-nation EU, new orders increased 1.8 percent in the month.
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