January: +0.1% m/m, +20.9% y/y

MNI median: +0.8% m/m, +21.2% y/y
MNI range: +0.3% to +2.0% m/m

December: +2.7% m/m (revised from +2.1%)
November: +2.1% m/m (revised from +2.2%)
October: +1.4% m/m (unrevised)
September: -4.1% m/m (revised from -4.2%)
August: +5.2% m/m (unrevised)
—

FRANKFURT (MNI) – Eurozone industrial new orders rose less than
expected in January, weighed by a sharp drop in heavy transport orders,
though December’s increase was revised upwards, Eurostat reported on
Wednesday.

Taking into account December’s 2.7% rise, the 0.1% monthly
increase boosted orders to their highest level since mid-2008 — 20.9%
higher on the year and 2.7% above the 4Q average, which had risen 2.5%
on the quarter.

Excluding demand for heavy transport equipment (-11.4% m/m, -17.9%
y/y), which tends to be quite volatile, but has a limited immediate
impact on overall figure, new orders rose by a much more impressive 1.6%
on the month, which widened the annual increase to 22.4%.

Total capital goods orders fell 2.6% in the month since December,
but were still 23.4% higher on the year. Intermediate goods new orders
jumped 4.4% on the month to give an annual rise of 25.6%.

Consumer durables orders rebounded 2.8% m/m, widening the annual
gain to 6.1%, while non-durables fell back 1.3% m/m to give an annual
rise of 3.8%.

Recent indicators point to sustained growth in demand for industry.
The February purchasing managers index (PMI) showed manufacturing demand
growing at the second fastest clip in over 10 years, boosted by a
10-month high in export new orders. This lifted the headline index to
its highest level since mid-2000.

Firms polled by the European Commission in February were also more
optimistic regarding order books and production prospects, lifting these
indicators to their highest levels since March 2008 and early 1995,
respectively.

Still, downside risks to further expansion exist, including the
uprisings in the Middle East and North Africa, as well as the
catastrophe in Japan, which could lead to further gains in energy prices
in the near term.

“Uncertainties have increased and relate to developments in the
commodity markets, not least as Japan might substitute nuclear power by
other sources of energy, such as oil and natural gas,” European Central
Bank Executive Board member Juergen Stark said on Tuesday.

A recent analysis conducted by the Organisation for Economic
Cooperation and Development (OECD), however, suggested that the impact
of higher oil prices on overall activity and price levels would be
“modest”.

The OECD also said that central banks may not need to react to
recent price jumps, but did warn of the dangers if price expectations
became unanchored.

“If inflation expectations were to destabilise, the effect of
recent oil price hikes, if sustained, could be stronger than expected,”
the OECD said.

After suffering a 2.9% fall in December, German new orders
rebounded 3.7% in January to give an annual rise of 24.9%.

German manufacturers remain broadly optimistic for the coming
months, the Ifo institute’s March survey showed. Export expectations
alone rising to their highest level in years. “Exporting firms once
again anticipate stronger impulses from foreign business,” said Ifo
President Hans-Werner Sinn.

In France, the fall in demand for automobiles weighed heavily on
overall industrial new orders, resulting in a 7.8% setback in January,
though widening the annual increase to 16.2%.

The outlook for industry demand in France has weakened, as firms
revised down their assessment of total order books to average levels in
February, Insee’s survey showed. Their view of export order books,
however, improved for the third consecutive month.

Italian industrial orders also fell back in January, sliding 1.5%,
but were 19.0% higher on the year. Manufacturers continued to view order
books and output prospects favourably, as evidenced by the high levels
of Isae’s sub-indicators in February.

In Spain, orders gained an additional 3.2% m/m and 13.1% y/y.
Spanish firms were less pessimistic regarding order books, lifting the
Commission’s sub-indicator to its highest level since July 2008.

Among smaller Eurozone economies, the strongest monthly gains were
noted in Ireland (+6.2%). Conversely, Estonia (-34.5%) led the way in
declines, followed by Finland (-7.7%) and the Netherlands (7.1%).

— Frankfurt bureau: +49 69 720 142; e-mail: frankfurt@marketnews.com —

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