August preliminary: +1.9% m/m, +6.2% y/y

MNI median forecast: +0.4% m/m, +4.6% y/y
MNI survey range: -1.0% to +0.7% m/m

July: -1.6% m/m (-2.1%)
June: -0.7% m/m (-1.2%)
May: +3.5% m/m (+3.7%)
April: +0.1% m/m (-0.4%)
March: -0.1% m/m (+0.5%)
—

FRANKFURT (MNI) – Eurozone industrial orders rose much faster in
August than even the most optimistic forecasts had projected, boosted by
a strong rebound in demand for heavy transport equipment, Eurostat
reported on Monday.

Taking into account July’s upward revision, August new orders
jumped 1.9% on the month, to give an annual change of +6.2%. On average,
demand in both July and August was unchanged compared to 2Q, which in
turn was up 2.5% vs. the previous quarter.

Excluding the demand for heavy transport equipment, which rose
56.5% m/m, factory orders were up by a more modest 0.7% and 5.0% on the
month and year, respectively.

Capital goods new orders were up 2.7% m/m, partially offsetting
July’s sharp fall, to bring the annual increase to 7.8%. Demand for
basic goods increased 1.1% on the month, resulting in a year-on-year
change of +6.1%. Consumer durable goods orders fell 0.8% m/m to bring
levels down 3.1% on the year, while non-durables rebounded 1.2% m/m and
were up 4.3% on the year.

The strength reflected in the August report seems unlikely to last
going forward. The most recent purchasing manager index (PMI) reports by
Markit Economics showed that overall new orders, dragged down by
weakness of demand at home and abroad, fell at a pace not seen since
mid-2009. This suggests that a number of manufacturers could be cutting
output as they head into the last quarter of the year.

A recent European Commission survey also noted worsening orders
books across the vast majority of Eurozone states, with only Belgium,
Estonia, Spain, the Netherlands showing – albeit very modest –
improvements.

Noting the deterioration in business confidence and the outlook for
new business, the Ifo institute in Germany, together with national
statistics agencies INSEE in France and ISTAT in Italy, projected a
slight decline in output for the fourth quarter following a 0.4% rise in
3Q. Production would then recover by a modest 0.1% in 1Q12.

New orders in Germany fell 1.2% in August to their lowest level in
five months, trimming the annual gain to 5.8%.

The decline in German new business continued into both September
and October, a PMI survey showed, with anecdotal evidence suggesting
that eroding confidence in the economic outlook contributed to reduced
client spending and, in some cases, cancellations in October.

Manufacturers cited in the latest Ifo survey had revised up their
export expectations in October, helping to reduce companies’ scepticism
regarding future business developments.

French new orders recovered 2.8% on the month in August, resulting
in an annual increase of 9.9%.

However, in a signalling of difficult times for French industry in
the upcoming quarter, demand for French manufactured goods fell in
September at the sharpest rate in over two years, a PMI survey noted,
while an INSEE survey noted French industry morale falling to a 13-month
low on the back of slumping new business.

In Italy, August new orders increased 6.0% and 6.3% on the month
and year, respectively. Nevertheless, further erosion in foreign demand,
combined with a drop back in domestic orders weighed on sentiment in the
manufacturing sector, knocking ISTAT’s business confidence indicator to
its worst level since the start of 2010.

Spanish manufacturing new orders rebounded 2.7% on the month in
August, boosting the annual gain to +3.0%.

However, deteriorating economic conditions weighed on client demand
in September, a PMI report noted, bringing new orders down at their
fastest pace since well before the 2008-2009 recession.

Elsewhere, the strongest monthly increase in August was noted in
Slovakia (+12.6%), followed by Estonia (+11.2%). On the other side of
the spectrum, sharp declines were noted in the Netherlands (-5.3%),
Ireland (-4.0%) and Finland (-3.6%).

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

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