European Industrial Orders Increase for Third Month on Intermediate Goods

European industrial orders increased for a third month in April, led by demand for intermediate goods such as car engines.

Orders in the 16-nation euro area rose 0.9 percent from March, when they jumped 5.1 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast orders to increase 1.6 percent, the median of 18 estimates in a Bloomberg News survey showed. In the year, April industrial orders rose 22.1 percent after increasing 20.3 percent in March.

The euro’s 7.7 percent drop against the dollar over the past three months is making European exports more competitive just as an Asian-led global recovery strengthens. Volkswagen AG’s Audi luxury division said on June 22 that it’s stepping up production to meet higher demand for some models. Still, European manufacturing growth slowed in June after the Greek debt crisis clouded the economic outlook.

“The continued strong global environment and the fall in the euro should cushion the economy,” said Nick Kounis, chief European economist at Fortis Bank Nederland NV in Amsterdam. “We expect to see moderate growth in the coming quarters after what is likely to be a strong second-quarter outcome.”

The euro was little changed against the dollar after the data, trading at $1.2273 at 10:05 a.m. in London, down 0.3 percent on the day.

Borrowing Costs

European policy makers last month agreed on an unprecedented loan package for distressed countries after concern about Greece’s fiscal crisis undermined investor confidence and pushed up borrowing costs. While governments from Spain to Italy have since pledged to step up budget cuts, the euro continued to decline, falling 12 percent against the dollar over the past month.

Reviving export orders helped the euro-area economy gather speed in the first quarter from the previous three months as households trimmed spending. The Organization for Economic Cooperation and Development said on May 26 that it expects the global economy to expand 4.6 percent this year, with China seen growing more than 11 percent and India 8.3 percent.

PSA Peugeot Citroen, Europe’s second-biggest carmaker, said on June 2 that it aims to achieve stable European sales this year. Lanxess AG, Germany’s largest publicly traded specialty- chemicals company, on May 28 forecast a “significant” improvement in full-year earnings on increasing Asian demand.

Global Recovery

“A global recovery for Audi is under way,” Audi Chief Financial Officer Axel Strotbek said on June 22. China’s “domestic engine keeps running and is now bringing a boom to the rest of the world that certainly offsets the crisis in part.”

Euro-area industrial orders for intermediate goods rose 1.7 percent in April from March, today’s report showed. Orders for capital goods fell 0.8 percent in the month and those for durable consumer goods decreased 0.9 percent. Orders advanced 1.1 percent excluding heavy transport equipment such as ships and trains.

To contact the reporter on this story: Simone Meier in Zurich at smeier@bloomberg.net

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