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Economy in Brief

Total European Factory Orders Down in January, But Most Industries Have Gains
by Carol Stone March 22, 2006

New orders for manufactured goods in Euro-Zone countries fell 5.9% in January, according to a report published today by Eurostat. This drop followed sizable increases of 4.9% and 5.3% in November and December, respectively, however, and the year-on-year gain is a hefty 9.7%.

Much of the month-to-month movement is due to transport equipment, particularly ships and aircraft. As seen in the table below, this category, comprising NACE industry groups 34 and 35, surged 10%+ in each November and December, so a 14.4% drop in January is hardly surprising. In fact, a new subtotal devised by Eurostat excludes NACE 35: ships, railroad equipment and aircraft. This segment's orders rose a mere 0.2% in January, although prior strength means those orders were up a substantial 10.7% from January 2005.

These gains in orders have to be encouraging for European business leaders and policymakers. As we have reported here recently, industrial production itself is mixed at best, with stagnation characterizing many of the nations in that region. Employment has continued a downward trend in several majors countries, even while uptrends are starting to develop in others. These basic indicators, though, show that steps toward growth are tenuous.

So orders have begun to look better. Further, a diversity of industries is participating. As seen below, chemicals and machinery both have increasing order books, and textiles and wood products do as well.Notably, then, it is beneficial to look beyond headline series to details of these indicator reports to assess the current position of an industry or even of an entire regional economy.

SA, Indexes, 2000=100, % chg Jan 2006 Dec 2005 Nov 2005 Year/Year* 2005* 2004* 2003*
Total -5.9 5.3 4.9 9.7 4.6 7.3 0.2
Total ex NACE 35** 0.2 1.5 2.7 10.7 3.7 6.5 0.3
Selected Industries:              
Transport Equip. -14.4 10.6 10.4 11.2 6.0 10.5 0.8
Chemicals & Products -0.3 1.0 2.3 7.1 4.9 5.5 0.5
Machinery & Equipment 1.9 -0.8 0.2 10.8 5.6 6.8 -1.4
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