RTTNews - Eurozone's industrial new orders dropped at the steepest pace on record annually in April, reflecting lower demand for intermediate and capital goods, data released by the Eurostat showed Thursday.
Industrial new orders plunged 35.5% year-on-year in April, after declining a revised 26.5% in March, and also faster than economists' expectations for a 32.8% fall. The latest decline is the biggest since the series began in 1995.
During the month, new orders for capital goods dropped 39.1% year-on-year in April, quicker than a 29.2% drop in the preceding month. New orders for intermediate goods decreased 38.3% compared to a 30.5% fall, while those for durable consumer goods were down 26%, after a 17.6% decline in the previous month. Moreover, new orders for non-durable consumer goods slipped 8.9%, following a 3.4% drop in March.
Month-on-month, new orders dipped 1% in April, following an upwardly revised 0.2% drop in the preceding month. Economists expected new orders to be flat. New orders declined among most categories, with the exception of non-durable consumer goods.
The weakness in new orders reflected also in industrial production, with factory output dropping year-on-year at its fastest pace on record in April. Industrial output dipped 21.6% year-on-year in April after falling a revised 19.3% in March. On a monthly basis, production was down 1.9% following a fall of 1.4% in the previous month.
Wednesday, the Organization for Economic Co-operation and Development upgraded the economic outlook for its 30 member countries. The Paris-based group said the slowdown in these economies is reaching its bottom, but recovery is likely to be weak and fragile.
However, for the euro area, the OECD found no clear signs of recovery. The think-tank expects the eurozone to contract 4.8% this year and show no growth next year. The earlier projections were for a 4.1% fall for this year and a 0.3% fall next year. The organization said rising unemployment would hamper consumer spending, therefore the eventual recovery is likely to be slow.
Also on Wednesday, the European Central Bank allotted EUR 442 billion to banks for 12 months, the biggest amount it has ever given in a single auction, in an effort to maintain proper functioning of the financial market amid the global crisis.
Moreover, to ease tension in the financial system and to ensure smooth flow of funds, the ECB has cut its key interest rate to a record low of 1%. The central bank has cut the key interest rate by a total of 325 basis points since October last year. The ECB also plans to buy EUR 60 million in covered starting next month.
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