Global| Nov 24 2009Euro-Area Orders Continue To Claw Their Way Back
Summary
Euro-Area orders are still falling year-over-year. As the chart shows the Yr/Yr drop is being steadily mitigated. Both foreign-sourced orders and domestic orders (in-region orders) are rebounding smartly after their recession-induced [...]
Euro-Area orders are still falling year-over-year. As the chart shows the Yr/Yr drop is being steadily mitigated. Both foreign-sourced orders and domestic orders (in-region orders) are rebounding smartly after their recession-induced drop.
Of the EU’s big four economies Germany and France are doing best with orders surging at stunningly strong 3- and 6-month rates of growth. Italy’s orders are still falling over both those periods as are orders in the UK. UK orders, in fact, are dropping at a horrific 31% annual rate in the three month period ended in Sept. demonstrating a severe drop off sparked by a 15.1% order drop in the month of August alone.
Needless to say the Euro-Area, while doing better, remains a very heterogeneous community. The orders rebound itself, is also not altogether uniform. The detailed figures revealed September's orders were driven by heavy transport equipment, such as ships, railway and aerospace equipment, which tend to be volatile. Excluding heavy transport equipment, orders dropped 1.2% from August and were 18.2% weaker than in September last year. Orders for intermediate goods dropped 2.1% in September from August, but orders for capital goods, durable consumer goods and nondurable consumer goods all rose.
On balance the orders trends show that the zone is doing better. As in the US a number of Zone economies did better on the back of government schemes to boost auto sales coupled with scrappage requirements; these programs are starting to lapse with some negative consequences for orders and growth.
For the time being though the Euro-Area is on the mend. The Markit PMIs showed that both MFG and Services sectors continued to improve in November. Germany’s IFO report showed continued improvement in November as well. The Markit data showed the rate of improvement is slowing down. The bottom line for now is that improvement continues but the pace of the recovery remains a keen issue and one on which incoming reports have not been altogether optimistic or uniform. The backtracking in the UK orders improvement and the slowdown in the November Markit indices’ improving trends are two recent pieces of disappointing data.
| Euro-Area-13 and UK Industrial Orders | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Saar except m/m | Mo/Mo | Sep 09 | Aug 09 | Sep 09 | Aug 09 | Sep 09 | Aug 09 | ||
| Ezone Detail | Sep-09 | Aug-09 | Jul-09 | 3-Mo | 3-Mo | 6-mo | 6-mo | 12-mo | 12-mo |
| MFG Orders | 1.5% | 0.6% | 4.4% | 29.0% | 35.8% | 23.6% | 19.1% | -16.5% | -23.2% |
| Memo:MFG | |||||||||
| Total Orders | 1.5% | 0.6% | 4.4% | 29.0% | 35.8% | 23.6% | 19.1% | -16.5% | -23.2% |
| E-13 Domestic MFG orders | 6.5% | -3.2% | 5.1% | 38.3% | 40.3% | 22.4% | 5.4% | -13.4% | -21.4% |
| E-13 Foreign MFG orders | 7.3% | -5.0% | 5.0% | 31.1% | 32.8% | 26.3% | 13.9% | -17.3% | -24.9% |
| Countries: | Sep-09 | Aug-09 | Jul-09 | 3-Mo | 3-Mo | 6-mo | 6-mo | 12-mo | 12-mo |
| Germany (MFG): | 1.5% | 2.5% | 2.0% | 26.9% | 40.6% | 29.8% | 35.0% | -16.7% | -24.2% |
| France(Ind): | 5.7% | 2.9% | 4.7% | 67.4% | 42.3% | 33.8% | 6.0% | -5.6% | -14.0% |
| Italy (Ind): | 5.2% | -8.6% | 2.4% | -5.8% | -16.5% | -3.8% | -16.4% | -21.4% | -29.5% |
| UK (Engineering Industy): | 2.3% | -15.1% | 4.7% | -31.7% | -26.0% | -3.0% | -3.5% | -30.9% | -13.1% |
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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