Euro zone industrial new orders fell more than twice as much as expected month-on-month in July, data showed today, pointing to slower economic growth in the second half of the year.
The European Union's statistics office Eurostat said orders in the 16 countries using the euro fell 2.4 per cent against June for an 11.2 per cent year-on-year rise, pulled down mainly by a slump in demand for capital and durable consumer goods.
Economists had expected a 1.1 per cent monthly decline and a 16.3 per cent year-on-year gain.
"This suggests that growth may be decelerating in the third quarter, but because we are starting off from a fairly strong base in the second quarter, growth should not be that bad, should still be decent, in the third," said Giada Giani, economist at Citigroup.
The overall euro zone result was weighed down by a weak performance in the euro zone's biggest economy Germany, where orders fell 2.6 per cent month-on-month, and the third biggest economy Italy, where they dropped 3.2 per cent.
Industrial new orders point to trends in production over the coming months.
Economists expect the euro zone economy to slow down in the third and fourth quarters after a 1.0 per cent quarter-on-quarter expansion in the April-June period.
The European Commission has forecast economic growth at 0.5 per cent quarter-on-quarter in the third quarter and 0.3 percent in the fourth.
Without the volatile orders for ships, planes and trains, however, the orders were down only 0.6 per cent on the month and up 13.6 per cent against the same period of last year.
Orders for capital goods, which are used in investment, fell 5.1 per cent on the month and demand for durable consumer goods dropped 3.2 per cent after a 1.3 per cent fall in June.
"This was the second successive fall in orders for durable consumer goods, indicating that consumers remain reluctant to splash out on big-ticket items," said Howard Archer, economist at IHS Global Insight.
Reuters