(Adds economist comments)
By Jan Strupczewski
BRUSSELS, Sept 23 (Reuters) - Euro zone industrial new orders rose more than expected month-on-month in July on demand for durable consumer goods, reinforcing expectations that the single currency area will exit recession in the third quarter.
Industrial orders in the 16-country area rose 2.6 percent against June, the European Union's statistics office said on Wednesday. They were 24.3 percent lower than a year earlier.
"This reinforces hopes and expectations that the euro zone will return to growth in the third quarter," said Howard Archer, economist at IHS Global Insight.
Economists polled by Reuters had expected a 2.0 percent monthly increase and a 25.0 percent year-on-year fall.
Industrial new orders point to trends in economic activity as they translate into production over the coming months.
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.
"In the near term at least, the euro zone manufacturing sector should be helped by the major de-stocking that has now occurred while demand is picking up to a limited extent after collapsing in late 2008 and early 2009," Archer said.
But despite the positive signals, the European Central Bank is widely expected to keep its interest rates low for a considerable time because a sustained pickup in manufacturing needs extended growth in domestic and foreign orders.
"This currently remains far from certain," Archer said.
He noted that the relatively strong euro exchange rate against the dollar would be a headwind for euro zone manufacturers given fierce global competition.
Without volatile orders for ships, planes and trains, orders performed more strongly -- rising 3.1 percent month-on-month for a 23.4 percent annual decline.
July is the second straight month of rising orders after two months of decline. Eurostat revised up its June data to a 4.0 percent monthly gain from the 3.1 percent rise reported earlier, and put the annual drop at 25.7 percent instead of 25.1.
The July rise was led by demand for durable consumer goods, up 5.6 percent, and capital goods, up 2.9 percent. Orders for non-durable consumer goods fell 1.8 percent on the month. (Editing by Dale Hudson)