Rising industrial orders add to EU recovery signs[fr] 

Orders rose 3.1% month-on-month for a 25.1% annual drop, European Union statistics office Eurostat said . 

Economists polled by Reuters had expected a 1.5% monthly rise and a 28.9% annual fall.

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

"A pick up in the global economy is starting to feed through to the euro zone industrial sector and we expect to see a return to growth in the third quarter for the industry and the overall economy," said Nick Kounis, an economist at Fortis Bank.

The economy of the 16-country euro zone started shrinking quarter-on-quarter in the second quarter of 2008, hit by a global economic slowdown brought on by a credit crunch.

The second quarter of 2009 was the fifth straight quarter of economic contraction, but only by a smaller than expected 0.1% after a 2.5% drop in the first quarter.

Kounis said the June order data did not supply new clues for European Central Bank monetary policy because the upward trend could already be seen in May orders' data from Europe's biggest economy Germany.

But he said the numbers clearly strengthened the signs of eurozone recovery. The monthly rebound in June comes after two straight months of declines in orders, with Eurostat revising down May data to a 0.5% monthly fall from -0.2% and to a 30.3% annual drop from -30.1%.

The June rise was led by a surge in demand for capital goods, up 5.6%, and non-durable consumer goods, up 3.1% on the month. Demand for intermediate goods and durable consumer goods remained subdued, down 0.9 and 3.5% respectively.

Excluding orders for ships, planes and trains, which are volatile, orders were still up 1.9% on the month and down 26.7% year-on-year, a less pronounced fall than May's 30.3% or April's 35%.

Earlier on Saturday, European Central Bank President Jean-Claude Trichet warned policymakers not to forget the lessons of the devastating financial crisis now that the worst has passed.

ECB Governing Council member Ewald Nowotny told Reuters on Saturday that Europe's economy will improve in the second half of the year, but that a sustained recovery will likely not take hold until early 2010. "What we see now is that to a large part this is still a recovery sponsored by public measures," he said.

(EurActiv with Reuters.)