Industrial new orders in the eurozone showed solid annual growth in January while both exports and imports rose, data showed on Wednesday, supporting economists' views that an economic recovery is under way.
Industrial orders in the 12 countries using the euro fell 5.9 percent month-on-month in January, defying market expectations of a 0.3 percent rise because of volatile orders for heavy transport equipment, the EU's statistics office said. But in annual terms, which strip out some of the volatility, new industrial orders gained 9.7 percent, albeit against a market consensus of an 11.1 percent rise.
Economists also noted the poor monthly comparison was against a higher-than-expected base, because the December data was revised up to a 5.3 percent increase from 2.5 percent.
"The January data's weakness is misleading, as the trend is upwards and reliable leading indicators like the PMI for new orders point to a rebound in the month-on-month changes in the coming months," said Ken Wattret, economist at BNP Paribas.
Eurostat also said that without the volatile orders for ships, railways and aerospace equipment, industrial new orders grew by 0.2 percent in January month-on-month, more in line with expectations.
The eurozone manufacturing purchasing managers' index (PMI) for February showed output and orders both rising at their fastest rate since mid-2004.
Yet last week, data showed industrial production in January stagnated month-on-month in the eurozone, which some economists took to indicate that economic recovery remained shaky.
The monthly drop in the January orders therefore added uncertainty to the strength of the upswing. "The recovery is clearly under way, but ... the softness we see in these numbers raises question marks as to how strong first-quarter GDP growth will prove to be," said Audrey Childe-Freeman, European economist at CIBC World Markets.
While the non-seasonally adjusted trade gap jumped to 10.8 billion euros ($13 billion) from 0.7 billion in December and a 1.6 billion deficit a year earlier, the seasonally adjusted gap shrank to 2.5 billion from 2.6 billion in December.
"Both exports and imports are up again in January, confirming the picture of solid economic activity," said Dominique Barbet, economist at BNP Paribas.
Non-seasonally adjusted data for 2005 showed the main drag on the eurozone trade balance was energy, where the deficit deteriorated steeply to 193.1 billion euros from 136.4 billion euros in 2004.
Among main trading partners, the 12 countries using the euro recorded a 29 percent surge in imports in 2005 from major oil and gas exporter Russia, which was only partly compensated by a 21 percent increase in eurozone exports to that nation.
Eurozone imports from China jumped 26 percent last year, non-seasonally adjusted Eurostat data showed, while exports to China rose only 7 percent and the trade gap widened to 74 billion from 52 billion euros.