European Industrial Orders Fall, Led by Transport

By Fergal O'Brien

Aug. 22 (Bloomberg) -- European industrial orders fell the most in more than six years in June, led by a drop in transport equipment such as planes and rail cars.

Industrial orders in the 15-nation euro area declined 7.4 percent from a year earlier, the most since December 2001, the European Union statistics office in Luxembourg said today. Excluding transport, orders fell an annual 1.5 percent. Economists expected a 6.3 percent drop in total orders, according to the median of 10 estimates in a Bloomberg survey.

Orders for transport equipment plunged 29.8 percent in June. Such orders ``tend to be very volatile, with a limited immediate impact on production,'' the statistics office said in the report.

European industrial production stagnated in June after falling the most in almost 16 years in May, according to data released Aug. 13. A survey of purchasing managers published yesterday showed the region's manufacturing industry contracted in August as new orders declined for a fifth month.

``One of the key engines of growth for the manufacturing sector in the euro zone -- and in particular Germany -- has been demand for capital goods,'' Kenneth Wattret, an economist at BNP Paribas in London, said in a note to clients. ``Both the orders and output data in recent months have shown a marked loss of momentum in this sector.''

Orders in Germany, Europe's largest economy, unexpectedly fell in June from May, the seventh straight decline, the Economy Ministry in Berlin said Aug. 6. Tognum AG, the Friedrichshafen, Germany-based diesel-engine maker, last week scaled back 2008 sales and margin forecasts after a declining dollar and slowing economic growth led to a drop in second-quarter orders.

Euro-area orders fell 0.3 percent in June from the previous month, according to today's report. Excluding transport, which declined 3.7 percent, industrial orders rose 0.6 percent.

To contact the reporter on this story: Fergal O'Brien in Dublin at fobrien@bloomberg.net.