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Economy in Brief

Euro-Area Orders Barely Edge Up on Strong Foreign Demand
by Robert Brusca  March 23, 2011

EMU orders are up by just 0.1% in January after rising by 2.7% in December and 2.1% in November. Despite the weak January result the three-month growth rate is up at an accelerated rate of growth compared to six months and is slightly higher than the 12-mo rate of growth. Domestic orders fell in January by 0.2% but on the heels after a 4.9% surge in December. That makes the January weakness appear to be more of a timing issue between January and December orders.

Foreign orders are on an opposite cycle having dropped in December they rebounded strongly in January.

Country level data show a great deal of order variability in Dec/Jan period. Germany, France and Italy each showed order reversal patterns between December and January with monthly growth rates switching signs.

With such volatility across the largest zone economies we can only look at broader breadth patterns to get a clue on what is going on. There only Italy shows evidence of a withering pattern of growth. For Italy sequential growth rates are declining steadily from 14% to 12% to 2.7% from 12-mos, to 6-mos to 3-mos. Other large economies are showing trendless growth fluctuations or acceleration.

Manufacturing sales are accelerating. There is strength across sectors as well. While the small drop in orders may hint at some slowing, the broader trends and evidence across Euro-Area member countries and sectors shows that the manufacturing recovery remains in force across the Euro-Area and across Euro-Area sectors. The weakness in January is just part of the normal variability in a very volatile sector.

While the BOE decided today in the face of rising inflation to bide its time at it sees inflation headed to 5% even as core inflation is rising, we are unlikely to see the same temperance from the ECB. Growth in the Zone seems solid enough to pave the way for Trichet to follow through on the kind rate hike that he has been hinting at in recent weeks. Today’s report seems to find the Euro-Area economy strong enough to accomplish that goal.

Selected Euro-Area Industrial Orders
SAAR Except M/M Mo/Mo Jan
11
Dec
10
Jan
11
Dec
10
Jan
11
Dec
10
Euro-Area Detail Jan
11
Dec
10
Nov
10
3Mo 3Mo 6Mo 6Mo 12Mo 12Mo
MFG Orders 0.1% 2.7% 2.1% 21.7% 28.0% 15.3% 11.3% 20.9% 19.3%
MFG Sales 3.0% 2.3% 0.9% 28.1% 24.8% 19.5% 10.7% 16.4% 14.2%
Consumer 0.3% 1.2% 0.2% 7.0% 8.3% 3.9% 3.5% 4.4% 4.2%
Capital 2.1% 2.4% -0.3% 18.0% 30.9% 21.2% 11.2% 17.1% 15.6%
Intermediate -0.2% 4.9% 2.6% 32.9% 23.3% 16.1% 16.5% 18.2% 14.1%
Memo:MFG
Total Orders 0.1% 2.7% 2.1% 21.7% 28.0% 15.3% 11.3% 20.9% 19.3%
E-13 Domestic MFG orders -0.2% 4.9% 2.6% 32.9% 23.3% 16.1% 16.5% 18.2% 14.1%
E-13 Foreign MFG orders 2.5% -0.6% 4.2% 27.0% 22.3% 16.8% 10.8% 26.9% 24.9%
Countries: Jan
11
Dec
10
Nov
10
3Mo 3Mo 6Mo 6Mo 12Mo 12Mo
Germany (MFG): 3.7% -2.9% 5.4% 27.3% 17.3% 16.8% 4.1% 21.2% 23.8%
France(Ind): -7.8% 8.4% 2.7% 10.6% 66.8% 5.2% 29.7% 12.3% 6.9%
Italy (Ind): -0.3% 5.4% -4.3% 2.7% 3.1% 12.1% 9.0% 14.2% 13.5%
Spain(Ind): 4.3% 2.4% 0.0% 30.1% 15.7% 19.7% 6.2% 12.1% 8.6%
Compare: US Factory Ord 3.1% 1.4% 1.3% 25.8% 8.1% 17.5% 11.6% 9.7% 9.5%
Some Euro-Area reporters are timely and some lag. This table allows a sequential inspection of trends regardless of topicality
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