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European Industrial Orders Increased More Than Economists Forecast in June
European industrial orders rose more than economists forecast in June as strengthening global growth helped fuel the region’s fastest expansion in four years in the second quarter.
Orders in the 16-nation euro area increased 2.5 percent from May, when they jumped 4.1 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast orders to rise 1.5 percent, the median of 17 estimates in a Bloomberg News survey showed. In the year, June industrial orders rose 22.6 percent after a 23 percent gain in May.
The euro-region economy is showing some signs of weakening after growing 1 percent in the second quarter as governments step up consolidation efforts to cut deficits and the global recovery loses steam. Growth in Europe’s services and manufacturing industries slowed more than economists forecast this month, data yesterday showed.
“We have probably already seen the peak of global economic growth,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. “We continue to expect euro-zone economic growth to slow to moderate rates following the impressive performance in the first half of the year.”
The euro was little changed after the release, trading at $1.2625 at 11:07 a.m. in Frankfurt.
In the 27-member European Union, orders increased 2.4 percent in June from the previous month, when they jumped 4 percent. For the euro region, the statistics office previously reported a 3.8 percent increase in orders in May.
BMW, Daimler
Euro-area industrial orders for capital goods rose 5.3 percent in June from the previous month, when they increased 4.7 percent, today’s report showed. Orders for intermediate goods rose 0.1 percent, while demand for durable consumer goods fell 1.1 percent. Orders excluding heavy transport equipment such as ships and trains advanced 1.6 percent.
Munich-based Bayerische Motoren Werke AG on Aug. 3 reported its biggest profit in 2 1/2 years led by demand in China and the U.S. as European households held back spending. Daimler AG said last month that the third quarter will be determined by how fast it is able to produce Mercedes-Benz brand cars to meet orders.
While the euro’s 12 percent drop against the dollar over the past year has helped exporters by making goods more competitive outside the region, European companies may struggle to maintain their earnings growth as consumers hold back spending and the global recovery shows signs of cooling.
In the U.S., weekly claims for jobless benefits jumped to the highest level since November and Philadelphia-area manufacturing shrank for the first time in a year. Chinese industrial production also cooled more than forecast in June.
Nobel Prize-winning economist Joseph Stiglitz told Dublin- based RTE radio in an interview broadcast today that the European economy is at risk of sliding back into a recession as governments step up consolidation efforts.
“Reversing the course of fiscal consolidation now would be a grave mistake,” Bundesbank President Axel Weber said in an interview with Bloomberg Television on Aug. 19 in Frankfurt. Still, “the current” economic “momentum is not sustainable.”
To contact the reporter on this story: Simone Meier in Zurich at smeier@bloomberg.net
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