Euro-Area Industrial Orders Fell in March
European industrial orders declined more than economists forecast in March, led by a drop in demand for durable consumer goods, such as appliances and furniture.
Orders in the euro area slipped 1.8 percent from February, when they increased 0.5 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast a drop of 1.1 percent, the median of 17 estimates in a Bloomberg News survey showed. Orders jumped 14.1 percent from a year earlier.
The euro-region recovery may struggle to gather strength after expanding at the fastest pace in almost a year in the first quarter as governments deepen budget cuts and surging oil prices squeeze companies’ spending power. European manufacturing growth weakened in May, German business confidence held steady and French executives grew more pessimistic.
“While the marked dip in euro-zone industrial orders in March needs to be treated with caution, there are nevertheless signs that the hitherto buoyant manufacturing sector may be coming off the boil,” said Howard Archer, chief European economist at IHS Global Insight in London. Companies “could be starting to find life more challenging in the face of significant headwinds.”
The euro pared gains after the data were released, trading at $1.4100 at 11:28 a.m. in Brussels, up 0.4 percent.
German Growth
European manufacturers have boosted spending and hiring to meet export demand, helping shield the economy from the impact of tougher austerity measures in peripheral nations. Continental AG (CON), Europe’s second-largest auto-parts maker, on May 5 reported its highest quarterly profit in more than three years.
Euro-area orders for durable consumer goods declined 6.8 percent and those for capital goods dropped 4.6 percent, today’s report showed. Orders for intermediate goods rose 0.6 percent from February. Total orders excluding heavy transport equipment such as ships and trains fell 1.1 percent.
The European Commission in Brussels on May 13 forecast the euro-region economy to expand 1.6 percent this year and 1.8 percent in 2012. German gross domestic product may rise 2.6 percent in 2011, with French GDP increasing 1.8 percent. The economies of Greece and Portugal, which both received external aid, will contract this year, the commission said.
With spending cuts and tax increases in some countries curbing consumer demand, companies have relied on faster-growing economies to bolster sales. PSA Peugeot Citroen, France’s biggest carmaker, said on May 11 it will raise its engine production capacity in China to meet surging demand.
A 41 percent gain in crude oil prices in the past year is clouding the growth outlook by sapping purchasing power of both companies and consumers. European economic confidence probably weakened in May, according to a Bloomberg Survey. The European Commission will release the report on May 27.
Industrial orders in Germany, Europe’s largest economy, dropped 3.4 percent from the previous month, when they rose 2.6 percent, today’s report showed. French orders fell 0.7 percent and Italy reported a gain of 4.5 percent. In Spain, orders increased 0.3 percent.
To contact the reporter on this story: Simone Meier in Zurich at smeier@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
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