Euro zone March orders soar, Q2 pick-up seen

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Euro zone March orders soar, Q2 pick-up seen

BRUSSELS - Euro zone industrial new orders rose in March at their fastest rate in 10 years, data showed on Tuesday, suggesting economic activity is likely to pick up strongly in the second quarter in an export-led surge.

By (Reuters)

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Published: Tue 25 May 2010, 6:54 PM

Last updated: Mon 6 Apr 2015, 11:11 AM

The European Union’s statistics office, Eurostat, said industrial new orders in the 16 countries using the euro jumped 5.2 percent month-on-month for a 19.8 percent year-on-year rise, well ahead of expectations.

The monthly rise was the highest since June 2007 and the annual increase the strongest in a decade, reinforcing a positive picture for the region’s manufacturers driven by demand from abroad while domestic economies struggle.

“The global economic backdrop is extremely positive. We have also seen a fall in the euro so the export situation still looks very good,” said Nick Kounis, economist at Fortis Bank.

“There are of course clouds on the horizon especially on the domestic side, where we see heightened economic uncertainty added to additional fiscal tightening and more generally continued weak dynamics for domestic demand.”

In terms of euro zone GDP, he said he expected an “extremely positive” second quarter, followed by a slowdown in growth rates.

The region’s economy grew only modestly in the first quarter after stalling in the fourth, but stronger than expected March industrial output also suggested economic activity was picking up.

German surge

Industrial new orders point to trends in economic activity as they translate into production over the coming months.

Economists polled by Reuters had expected a 2 percent monthly rise in orders in March and a 14.6 percent annual gain.

Without the volatile component for ships, planes and trains, the monthly increase in orders was 4.5 percent and the year-on-year jump 20.2 percent.

Orders in the euro zone’s biggest economy, Germany, rose 5.7 percent on the month and surged 31 percent year-on-year.

“The orders and production data do tend to have closely related trends and so the continued strength in manufacturing orders bodes well for the general direction of industrial production in the months ahead,” said James Ashley, economist at Barclays Capital.

Economists have said euro zone growth is likely to accelerate to 0.5 percent in the second quarter after 0.2 percent growth in the first three months of the year and stagnation in the last three months of 2009.

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