January: -2.0% m/m, +9.5% y/y

MNI median: +1.6% m/m
MNI range: +0.3% to +2.3% m/m

December: +0.8% m/m (unrevised)
November: +2.8% m/m (revised from +2.7%)
October: -2.1% m/m (unrevised)
September: +1.7% m/m (unrevised)
August: +0.3% m/m (revised from +0.4%)

—

PARIS (MNI) – Eurozone industry orders surprised on the downside in
January, as a rebound in Germany was more than offset by setbacks
elsewhere, especially in France and Italy, Eurostat said Wednesday.

The 2.0% monthly downturn still left orders 7.0% higher on the
year, thanks largely to base effects from the slump in demand at the end
of 2008, but 0.6% below the 4Q average, which rose 1.1% on the quarter.

Compared to the highs in early 2008, industry orders in January
were more than 25% lower.

January’s drop was accentuated by a sharp downturn in heavy
transport equipment orders, which tends to be quite volatile with
limited immediate impact on overall production. Excluding this category,
orders fell only 1.3% on the month after a 0.5% downturn in December.

The drop for heavy transport equipment hit capital goods orders
particularly hard. The 6.8% drop in January retraced practically all of
December’s sharp rise. With manufacturing capacity utilization still
nearly 10 percentage points below long-term averages, producers will
have little need for expansive investment for some time.

Consumer non-durable goods orders fell back 2.1% in January after
stagnating in December and were 3.5% lower on the year — the only
category to register a negative annual change. Anemic consumer demand
within the eurozone is being compounded by the loss of market shares to
cheaper production sites abroad.

By contrast, intermediate goods orders bounced back 4.7% on the
month from a 3.9% downturn in December to post a 12.6% rise on the year.
The promising resilience of demand at the start of the production chain
is the silver lining in an otherwise disappointing set of data.

Consumer durables orders edged up 0.6% on the month, recouping only
part of December’s 1.5% downturn.

While industry demand recovered in February, order levels remain
low, the European Commission’s surveys suggests. Manufacturers’
assessment of new orders in January topped the long-term average for the
first time in years, while their outlook for exports rose to the highest
level in nearly two years.

However, producers estimated that orders on hand assured only 2.8
months of production ahead, compared to a long-term average of 3.1
months. Their assessment of order book levels, while gaining another two
points in February after a 19-point climb from a record low last June,
remained 24 points below the long-term average. Their view of export
orders alone was similar.

The latest factory PMI poll suggested that foreign demand
strengthened in March, as the export order component rose to a four-year
high of 58.4 from 56.0 in February and 53.8 in January.

In Germany, new industry orders bounced back 4.7% in January,
Eurostat said. National data showed that domestic orders led the monthly
rebound with a 7.1% leap, far outpacing the 1.9% recovery in foreign
orders. Bulk orders were higher than usual.

Demand for German industry goods has continued to strength since,
the factory PMI polls suggest. New orders in March rose at the fastest
pace on record (64.7) after a pick-up in February (61.7) from January’s
already high level (59.5). The Ifo institute’s latest survey showed that
producers remain quite upbeat concerning foreign demand at the six-month
horizon.

In France, by contrast, orders fell back 10.8% in January after a
15.7% spike in December. National data showed that automobile orders,
which had kick-started the industry upswing last summer, skidded 37.7%,
all but retracing the spike in December.

French manufacturing firms polled by Insee in March said that total
orders were little changed on the month, suggesting that the recovery in
foreign orders led by the semi-finished goods and auto branches was
offset by weaker domestic demand. Order books remained much thinner than
normal, producers reported. The March factory PMI poll painted a similar
picture, with domestic demand lagging the fastest rise in new export
(58.4) orders since the end of 2006.

New orders in Italy fell back 6.7% in January after four months of
solid gains. The Isae research institute’s sector survey in February
showed that manufacturers’ assessment of total orders rose to a 16-month
high, while their view of foreign orders bounced back to December’s
level. Near-term production prospects rebounded to a 20-month high and
the outlook for orders improved as well.

In Spain, orders dipped 1.4% in January, the first decline in six
months, but were still 12.1% higher on the year.

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

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