Eurozone industrial new orders turned out stronger than expected in April, data showed on Friday, pointing to continued strength in manufacturing. European Union statistics office Eurostat said orders in the 13 countries using the euro eased 0.4 percent month-on-month for a 12.2 percent year-on-year jump.
Economists polled by Reuters had expected a decline of 1.0 percent on the month and only an 8.7 percent annual increase. "That suggests euro area industry is still benefiting from a quite benign order inflow, suggesting that activity in the manufacturing sector remains strong for the time being," said Juergen Michels, economist at Citigroup. Excluding volatile demand for planes, ships and trains, orders fell 1.3 percent on a monthly basis but still rose 9.5 percent year-on-year.
"There is volatility in transport orders, which show another gain in April, and it puts all this into context," said Holger Schmieding, economist at Bank of America. "The underlying trend is still healthy but more muted than today's data suggests. Overall the eurozone's economy is in good shape but I would not get too exuberant," he said.
Eurostat also revised up its March industrial orders data by 0.1 percentage point to gains of 2.8 percent on a monthly basis and 8.1 percent in annual terms. Against the same period of last year, orders jumped 13.9 percent annually in the eurozone's biggest economy, Germany, 16 percent in the second-biggest, France, and 13 percent in Spain. They were 25.6 percent higher in Ireland.
New orders give an indication of future industrial production and therefore overall economic activity, which, in turn, may impact the monetary policy of the European Central Bank.
Markets expect the ECB, which wants to keep annual inflation just below 2 percent, to raise interest rates once or twice more this year amid robust eurozone economic growth. "While there has been some more mixed data and survey evidence across the eurozone recently, the overall impression is that growth is still clearly above trend," said Howard Archer, economist at Global Insight.
"Consequently, we believe that the ECB will pull the interest rate trigger again in September, taking interest rates up by a further 25 basis points to 4.25 percent," he said. "Furthermore, it is very possible that interest rates will reach 4.50 percent by the end of the year, barring a very clear slowdown in eurozone growth or a surge in the euro."