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UPDATE 1-Euro zone Nov orders surge, bode well for growth

Published 01/22/2010, 05:55 AM
Updated 01/22/2010, 05:57 AM

* Nov industrial orders +1.6 pct mth/mth (Reuters poll +0.5)

* Orders -1.5 pct yr/yr - Eurostat (Reuters poll -6.2 pct) (Recasts with economists' comments)

By Jan Strupczewski

BRUSSELS, Jan 22 (Reuters) - Euro zone industrial new orders surged more than three times as much as expected in November against October, boding well for economic growth in the last quarter of 2009 and the first three months of this year.

Orders in the 16-country area rose 1.6 percent from October and were 1.5 percent lower than a year earlier, the European Union's statistics office said on Friday.

Economists polled by Reuters had on average expected a 0.5 percent month-on-month increase and a fall of 6.2 percent year-on-year.

"The healthy rebound in euro zone industrial orders in November bodes well for production in the near term at least," said Howard Archer, economist at IHS Global Insight.

Eurostat also revised upwards its October orders data to show slightly smaller declines than previously reported.

"It is good news. It should help turn the inventory cycle in Europe and should mean good growth numbers in the fourth quarter in the euro zone, perhaps 0.4 percent quarter-on-quarter," said Carsten Brzeski, economist at ING.

Industrial new orders point to trends in economic activity as they translate into production over the coming months.

The euro zone pulled out of recession in the third quarter of 2009 with growth of 0.4 percent. Economists have said the fourth quarter may have been weaker because third-quarter growth was based on fickle inventory rebuilding and exports.

Orders for capital goods, such as machinery ordered by companies, fell 1.2 percent in November against October, when they had declined 4.9 percent month-on-month.

"This maintains suspicion that companies are still limiting their capital expenditure," Archer said.

Excluding highly volatile demand for ships, planes and trains, orders jumped 1.5 percent on the month and were 1.8 percent lower than in November 2008.

The orders growth was driven mainly by demand for intermediate and non-durable consumer goods, which jumped 1.8 percent and 1.2 percent respectively on the month.

"The orders data will be seen in growth numbers in the first quarter of 2010 -- the fact that it was mainly intermediate and non-durable consumer goods leading the growth would mean the time lag would be rather short," Brzeski said. (Editing by Dale Hudson)

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