March preliminary: -1.8% m/m, +14.1% y/y

MNI median forecast: -1.8% m/m, +12.3% y/y
MNI survey range: -3.8% to -1.0% m/m

February revision: +0.5% m/m (+0.9%)
January revision: +1.1% m/m (+1.2%)
December revision: +2.7% m/m (+2.5%)
November revision: +2.2% m/m (+2.1%) October: +1.2% m/m
—

PARIS (MNI) – Much as expected, Eurozone industry orders dropped
sharply in March, with steep declines in all branches except for
intermediate goods, Eurostat said Tuesday.

The 1.8% monthly downturn, the first since September, still left
new orders 14.1% higher on the year, but still more than 10% below
pre-recession peaks. The momentum of previous months assured a 3.4%
average gain in 1Q.

The drop in March was accentuated by falling demand for heavy
transport equipment, which tends to be very volatile with a limited
immediate impact on production. Excluding this category, orders fell
1.1% on the month and were 15.2% higher on the year.

Intermediate goods orders increased 0.6% on the month and were
19.2% higher on the year, suggesting that the industry recovery will
continue for some time. The drop in heavy transport demand helped drag
down capital goods orders 4.6% on the month, giving a 14.5% rise on the
year.

Consumer durable goods orders plunged 6.8% in March and were 2.6%
lower on the year. Still-sluggish consumer demand and competition from
low-cost producers abroad have undermined capacity in this branch.
Non-durables orders fell 3.5% on the month and were 0.5% lower on the
year.

Leading indicators suggest that demand will wane in the months
ahead.

Manufacturers polled by the European Commission in April expected
new orders to lose steam in 2Q. The outlook index fell 5.1 points from
the record high in January to return to the level in July. Still, their
assessment of order book levels continued to improve, thanks mainly to
higher export back orders. They estimated that orders on hand would
assure 3.7 months of production, up from 2.6 months in January.

The factory PMI poll also signaled slowing growth in new orders, as
the component dropped 3.6 points to 53.8. The ratio of new orders to
inventories, a guide to near-term output, fell sharply to the
second-lowest level since June 2009.

In Germany, demand surprised on the downside with 3.4% drop in
March that still left orders 13.0% higher on the year. National data
showed domestic orders down 3.5% on the month and foreign orders off
4.3%. Investment goods demand led the slide with a 7.2% fall,
accentuated by a below-average share of bulk orders.

The Ifo institute’s survey of German manufacturers this month
signalled a further erosion in output prospects at the six-month horizon
to the lowest level in more than a year, even though “great
opportunities” are expected from export business, Ifo said.

New orders in France slipped 0.7% in March and were 10.6% higher on
the year. Excluding heavy transport equipment the monthly downturn was
1.2%, led by pharmaceuticals, autos, high tech and optics, and textiles,
national data showed.

French industry firms polled by the Bank of France last month
reported a further contraction in order books. The Insee sector survey
released earlier today signaled more erosion, mainly in domestic demand.

By contrast, Italy reported a 4.5% surge in orders after a modest
upturn in February, giving a 22.2% rise on the year. National data
showed a strong boost from foreign demand, especially for metal products
and electric appliances. Manufacturers’ assessment of orders was stable
in April, practically unchanged for the fourth month in a row, according
to Istat’s survey.

In Spain, orders edged up 0.3% on the month, recovering less than
half of the previous downturn to stand 10.1% higher on the year.
Producers’ assessment of order books remained depressed in April, but
less so than in March, according to the Commission survey. Still, orders
on hand should assure 2.8 months of production, they estimated.

Among the other reporting countries, monthly gains were registered
only in Finland (+5.5%), Estonia (+3.9%) and the Netherlands (+0.3%).
Sharp drops were sustained in Slovenia (-2.3%), Greece (-4.0%), Slovakia
(-8.1%) and Ireland (-13.0%).

Compared to previous-year levels, orders in Greece were down 9.3%
and in Ireland they were 6.6% lower.

–Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com

[TOPICS: MT$$$$,M$X$$$,M$XDS$]