July preliminary: -2.1% m/m, +8.4% y/y

MNI median forecast: -0.8% m/m, +10.7% y/y
MNI survey range: -2.3% to +1.5% m/m

June revision: -1.2% m/m (-0.7%)
May revision: +3.7% m/m (+3.6%)
April revision: -0.4% m/m (-0.3%)
March revision: +0.5% m/m (+0.6%)
February: +1.5% m/m (unrevised)
—

PARIS (MNI) – Eurozone industry orders surprised on the downside in
July as a plunge for heavy transport accentuated the slowing trend,
Eurostat said Thursday.

After a 1.2% downturn in June, the 2.1% drop in July left orders
8.4% higher on the year, but still more than 8% below pre-crisis peaks.
July orders were 1.7% below the 2Q average, which had risen 2.5% from
1Q.

In contrast to previous months, July’s results were skewed lower by
a setback in orders for heavy transport equipment, which tend to be very
volatile with a limited immediate impact on production. Excluding this
category, orders rebounded 1.4% in July, surpassing most analysts’
forecasts, after a 3.3% downturn in June.

The drop in heavy transport demand left capital goods orders 2.5%
lower on the month but still up 11.4% on the year. Most other branches
registered a recovery from the drop in June. Orders for intermediate
goods rose 2.3% after a 5.3% downturn and were 8.0% higher on the year.
Consumer durable orders rebounded 5.1% after two months of decline and
were 3.8% higher on the year. Non-durables orders, however, slipped 0.1%
after a 3.1% downturn and were only 1.8% higher on the year.

Excluding heavy transport, the growth in orders slowed to 0.4% in
2Q from 4.5% in 1Q. July brought a meagre 0.1% rise on the 2Q average.
Leading indicators show demand weakening further in 3Q both at home and
abroad, suggesting that industry could become a drag on the economy
after the marked slowdown since the start of the year.

Manufacturers’ assessment of order books and foreign order books
eroded markedly in August to below-average levels in all reporting
countries except Germany, Belgium and Luxembourg, the European
Commission’s survey showed.

The flash September PMI polls were more dire, showing orders
declining for the fourth month in a row at the fastest pace in over two
years (44.8).

German orders had surprised on the downside in July with a 2.8%
drop due largely to a declining share of bulk orders. National data
showed that a recovery in domestic demand in all branches was offset by
a steep drop in export orders for capital goods.

Ifo’s survey of German manufacturers last month showed a further
erosion in output prospects at the six-month horizon to the lowest level
in over two years, reflecting in part weaker export expectations. The
PMI poll showed new orders contracting further in September (45.0), with
export orders falling at the steepest rate in 27 months.

New orders in France fell 11.2% after a 13.7% spike in June. The
sharp swings were due entirely to volatility for heavy transport
equipment. Excluding this category, orders rose 0.9% in July after +0.4%
in June, according to national data. As in Germany, leading indicators
for industry demand have deteriorated rapidly. The latest factory PMI
showed new orders falling at the fastest pace in 28 months.

In Spain, orders plunged 5.2% after a 1.5% downturn in June and
were 1.9% lower on the year. Producers polled by the Commission in
August reported a further setback for export orders on top of already
anemic domestic demand.

In Italy, orders edged up 0.6% on the month after June’s 6.9% dive
and were 8.8% higher on the year. While manufacturers’ assessment of
domestic orders recovered somewhat in August, their outlook for
production in the near term eroded further, according to Istat.

Monthly results were quite mixed for other reporting countries,
with gains in Estonia (+2.6%), Portugal (+1.8%) and Greece and Ireland
(both +0.4%) and declines in the Netherlands (-0.6%), Slovenia (-1.2%),
Slovakia (-7.7%) and Finland (-10.3%). Annual changes ranged from lows
in Ireland (-0.2%) and Slovakia (-1.4%) to highs in Portugal (+19.6%)
and Estonia (+24.5%).

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

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