US factory orders up, EU manufacturing recovery broadens

Washington/London: While new orders for US factory goods rose for a second straight month in March, suggesting strength in manufacturing and the broader economy at the end of the first quarter, the recovery in Eurozone manufacturing accelerated at the start of the second quarter with solid growth across most of the bloc.

French factories, however, struggled to maintain momentum, a business survey showed on Friday.

The US Commerce Department said on Friday new orders for manufactured goods increased 1.1 per cent. February's orders were revised to show a 1.5 per cent rise instead of the previously reported 1.6 per cent gain. Economists polled by Reuters had forecast new orders received by factories advancing 1.4 per cent in March. Orders excluding the volatile transportation category rose 0.6 per cent after advancing 0.7 per cent in February.

Manufacturing is pushing higher after a lull in the winter, but a surge in inventories in the second half of 2013 remains an obstacle to achieving a faster pace of factory activity.

A report on Thursday showed a gauge of national factory activity rose in April for a third month. The Commerce Department report showed inventories increased only 0.1 per cent in March, slowing from February's 0.7 per cent increase. In March factory orders rose across all categories. Unfilled orders rose 0.6 per cent and shipments increased 0.3 per cent.


In Eurozone, meanwhile, growth was again led by Germany, Europe's largest economy, and previously-lagging companies in Spain and Italy reported better business last month.

It was the first time since November 2007 that all PMIs (Purchasing Managers Index) in the region indicated growth coming in above the 50 break-even level.

But separate data showed Eurozone unemployment fell only slightly to 11.8 per cent in March, still near a record high, a sign that European households are yet to feel much of the corporate economic recovery.

'recent economic evidence remains consistent with the European Central Bank's baseline scenario which is that of a gradual recovery, said Philip Shaw at Investec.

'there are concerns about the confidence in France and the extent to which that could restrain economic growth this year and next. Also of concern to the ECB's Governing Council, which meets next week to set monetary policy, factories cut goods prices for a second straight month and at a slightly steeper pace.

An earlier PMI from Germany showed improving growth. Italy's PMI soared to a three-year high and Spain's slipped just one basis point from March's near four-year high. France's main index slumped to 51.2 from 52.1, although still holding above the break-even level for a second month.


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