By Jan Strupczewski
BRUSSELS, Oct 23 (Reuters) - Industrial new orders in the euro zone rose more than expected month-on-month in August on demand for intermediate goods, data showed, underlining expectations of a recovery in the third quarter and beyond.
Industrial orders in the 16-country area rose 2.0 percent against July, the European Union's statistics agency said on Friday. They were 23.1 percent lower than a year earlier.
Economists polled by Reuters had on average expected a 1.2 percent monthly increase and a 22.5 percent year-on-year fall. Industrial new orders point to trends in economic activity as they translate into production over the coming months.
Eurostat revised its orders data for July, saying they grew by 3.0 percent against June rather than the earlier reported 2.6 percent. Their annual decline was larger, at 24.9 percent versus the initially reported 24.3 percent.
The August rise was led by demand for intermediate goods, up 3.8 percent on the month. Orders for capital goods, durable and non-durable consumer goods fell on the month, suggesting weakness in consumer and investment demand after a July rally.
Without volatile orders for ships, planes and trains, orders performed more strongly -- rising 2.4 percent month-on-month for a 22.7 percent annual decline.
August was the fourth straight month of rising orders after a decline in April. Eurostat revised up its June data to a 4.2 percent monthly gain from the 4.0 percent rise reported earlier.
The economy of the euro zone started shrinking quarter-on-quarter in the second quarter of 2008, hit by a global economic slowdown brought on by the credit crunch.
The second quarter of 2009 marked the fifth straight quarter of economic contraction, but by a smaller-than-expected 0.1 percent after a 2.5 percent drop in the first quarter.
Economists generally expect the euro zone returned to growth in the third quarter of this year.
They also expect the European Central Bank to keep interest rates low well into 2010 as a sustained pickup in manufacturing extends growth in domestic and foreign orders.
However, the strengthening euro, which touched a new 14-month high against the dollar on Friday, is likely to be a headwind for euro zone manufacturers given fierce global competition, economists say. (Editing by Dale Hudson)