June 22 (Bloomberg) -- European industrial orders rose in April, as increasing demand in Germany helped counter a slump in France and Italy, suggesting the euro region’s economic expansion maintained some momentum into the second quarter.
Orders in the euro area advanced 0.7 percent from March, when they fell 1.5 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast a gain of 1 percent, the median of 18 estimates in a Bloomberg News survey showed. Orders jumped 8.6 percent from a year earlier.
European manufacturers are powering the euro region’s expansion as booming Asian markets boost export demand. Volkswagen AG, Europe’s largest carmaker, said on June 17 that May deliveries jumped 17 percent. With governments stepping up budget cuts, the economy is showing some signs of slowing down after expanding 0.8 percent in the first quarter.
“We won’t reach past growth rates anymore,” said Uwe Duerkop, an economist at Landesbank Berlin. “Still, we’ll see further gains in orders. The second quarter will be weaker in the euro region with moderate economic growth.”
The euro was little changed after the data were released, trading at $1.4399 at 11:01 a.m. in Brussels, down 0.1 percent.
Euro-area orders for durable consumer goods rose 2.6 percent in April from the previous month, when they dropped 5.9 percent, today’s report showed. Orders for capital goods increased 1.7 percent, while those for intermediate goods slipped 0.1 percent. Total orders excluding heavy transport equipment such as ships and trains fell 0.6 percent.
The European Central Bank on June 9 forecast the euro-region economy to expand about 1.9 percent this year and 1.7 percent in 2012 with exports increasing 7.7 percent and 6.6 percent, respectively.
Volkswagen Chief Executive Officer Martin Winterkorn said on June 17 that he expects further “distinct growth” even as global conditions remain “challenging.” Andrea Formica, Fiat SpA’s head of sales, told reporters earlier this month that the European market “shows signs of recovery” and that Italy, Spain and Greece “are still facing difficulties.”
“This was the most successful May the company has ever reported,” Ian Robertson, sales chief at Munich-based Bayerische Motoren Werke AG, the world’s biggest maker of luxury cars, said on June 8. “We are looking forward to even more momentum at the end of the year.”
Irish Orders Surge
Industrial orders in Germany, Europe’s largest economy, jumped 2.4 percent from March, when they fell 2.5 percent, today’s report showed. In France and Italy, orders dropped 1.2 percent and 2.6 percent, respectively. Irish orders surged 11.2 percent in April, the biggest gain among the 17 euro states, while Greece reported an increase of 0.2 percent.
The euro-region economy may struggle to maintain its momentum after expanding at the fastest pace in almost a year in the first quarter. European economic sentiment weakened in May, manufacturing growth slowed and German investor confidence dropped more than economists forecast in June.
European policy makers earlier this week failed to agree on releasing the latest tranche of Greece’s 110 billion-euro ($158.5 billion) rescue funds, saying further aid hinges on Prime Minister George Papandreou delivering more budget cuts, asset sales and structural reforms.
Papandreou yesterday won a vote of confidence, bolstering his government’s chances of pushing through further austerity measures. Former Greek Finance Minister Nikos Christodoulakis told Francine Lacqua in an interview on Bloomberg Television today that it ends a “period of political uncertainty.”
“Undoubtedly, the confidence vote buys Greece time,” said Tullia Bucco, an economist at UniCredit Bank AG in Milan in an e-mailed note today. “However, the road ahead looks long and bumpy as challenges remain formidable.”
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