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EU factory orders rise, boost investors

By AFP

Factories in the 16-nation eurozone saw demand rebound 3.1 percent in June, providing more evidence of the much-sought after green shoots of recovery and encouraging markets upwards.

The rise was the first since a blip in March and, despite June's figures, industrial orders are still down by almost a third since their peak in February 2008, before the ill winds of recession blew.

In the 27-nation EU as a whole, industrial orders remained on the downward track, dropping by 0.4 percent in June and 24 percent over 12 months, according to official figures from the Eurostat agency.

"These latest data provide further support to our forecast for increasingly positive sentiment in the euro area industrial sector heading into the second half, with positive growth rates likely in both euro area industrial production and orders in the third quarter," said James Ashley of Barclays Capital Research.

Already firmer European stock markets welcomed the data as another sign the economy is on the mend, with London up 0.77 percent and Paris and Frankfurt each ahead 0.95 percent in late afternoon trade.

On the foreign exchange markets the euro gained ground against both the dollar and the yen, standing at 1.4334 dollars.

The biggest eurozone rise in factory orders was for capital goods, up 5.6 percent but consumer demand remained weak, with durable consumer goods down 3.6 percent.

Consumers are also paying lower prices for the finished goods,

Consumer prices throughout the eurozone fell a record 0.7 percent in July over 12 months, underlining that the crisis may be easing but it is far from over.

Eurozone unemployment rose to 9.4 percent in July. Twelve months earlier it stood at 7.5 percent.

On a national basis, eurozone powerhouse Germany was doing the heavy lifting, with its industrial orders up 4.6 percent in June while in percentage terms, Ireland led the way with a 14.8 percent rise.

On the flipside of the coin, eurozone member Spain saw orders drop 1.1 percent and Slovenia fell 3.9 percent.

Monday's figures were the latest in a string of more positive data, despite some fears that Europe could suffer a double-dip recession, which have buoyed both the region's stock markets and the euro in recent months.

European stock markets and the euro currency had soared on Friday as a survey showed the euro area economy stabilising in August.

Earlier this month Eurostat announced that the eurozone's trade surplus doubled in June to 4.6 billion euros (6.5 billion dollars).

Germany and France have also clambered out of recession, building hopes that they will drag the 16-nation eurozone as a whole out of negative territory.

"The forward-looking indicators of industrial orders remain generally positive," Ashely said.

The eurozone nations comprise Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain.

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