European Manufacturing Growth Unexpectedly Slowed in May
By Ben Sills
June 1 (Bloomberg) -- Manufacturing in the euro region expanded at the slowest pace in more than a year in May, signaling that the fastest economic growth in six years may be starting to ease.
Royal Bank of Scotland Group Plc's index of manufacturing in the 13 euro nations unexpectedly fell to 55.0 from 55.4 in April, Reuters Plc reported. Economists forecast an increase to 55.5, according to the median of 38 estimates in a Bloomberg News survey. The index is based on a survey by NTC Economics Ltd. of 3,000 purchasing managers.
European growth may cool from the fastest pace since the start of the decade as rising interest rates and a U.S. slowdown curb demand for the continent's cars, machinery and appliances. Still, the European Commission forecasts the economy will expand 2.6 percent in 2007, close to last year's 2.7 percent pace, and enough to prompt the European Central Bank to push rates higher.
``Year-on-year growth will edge down in the coming months,'' said Martin Van Vliet, an economist at ING Bank in Amsterdam. ``It's still too early to consider a pause'' in interest-rate increases. The ECB will ``err on the side of caution after June and go to 4.25 percent.''
Wage Increases
The euro-zone economy grew more than expected in the first quarter, expanding 0.6 percent, while U.S. growth slowed to a four-year low of 0.3 percent. Record-low unemployment is boosting domestic demand in Europe, fueling concern that wage increases will spark inflation.
The ECB is set to raise interest rates for the eighth time since the end of 2005 next week. Jean-Phillipe Cotis, chief economist at the Organization for Economic Cooperation and Development said yesterday he expects at least one additional move after the ECB lifts its benchmark rate to 4 percent this month.
Manufacturing growth is driving employment gains. Economists say European joblessness probably held at 7.2 percent in April, the lowest since region-wide records began in 1993, according to the median forecast of 39 responses in a Bloomberg News survey. The EU's Luxembourg-based statistics office will publish the report at 11 a.m. local time today.
DAF Trucks NV, the Dutch division of U.S. truckmaker Paccar Inc., said it plans to increase production at its main plant by about 5 percent next month as European freight transporters expand fleets to handle the increased flow of goods within Europe. MAN AG, Europe's no. 3 truckmaker, reported record earnings as sales increased in eastern Europe.
Confidence Rising
European business and consumer confidence both rose in May to the highest level since 1991, a report showed yesterday. German investor confidence jumped to an 11-month high in May as economists ratcheted up their growth forecasts for Europe's largest economy. The government increased its 2007 growth forecast to 2.3 percent from 1.7 percent in April.
European growth will ease to an annual 2.2 percent pace by the fourth quarter from 3.1 percent in the first as slower U.S. growth trims global demand, according to the median of 16 estimates in a Bloomberg News Survey of economists.
Retail sales in the euro area fell for the first month in three in May and French business confidence declined, further signs that the expansion may be abating.
``In the U.S. we expect the market's growth to be significantly lower in 2007 compared with 2006,'' Alexandre Saubot, chief executive officer of Haulotte Group, a French maker of cherry-picker trucks for roofers, said May 14.
Thales SA Chief Executive Officer Denis Ranque said orders at Europe's largest defense-electronics company peaked in the first quarter.
So far, faster economic growth in Asia is easing the effect of the U.S. slowdown. Alstom SA, the world's second-biggest train maker, said full-year profit more than doubled as China upgraded its rail network.
June 1 (Bloomberg) -- Manufacturing in the euro region expanded at the slowest pace in more than a year in May, signaling that the fastest economic growth in six years may be starting to ease.
Royal Bank of Scotland Group Plc's index of manufacturing in the 13 euro nations unexpectedly fell to 55.0 from 55.4 in April, Reuters Plc reported. Economists forecast an increase to 55.5, according to the median of 38 estimates in a Bloomberg News survey. The index is based on a survey by NTC Economics Ltd. of 3,000 purchasing managers.
European growth may cool from the fastest pace since the start of the decade as rising interest rates and a U.S. slowdown curb demand for the continent's cars, machinery and appliances. Still, the European Commission forecasts the economy will expand 2.6 percent in 2007, close to last year's 2.7 percent pace, and enough to prompt the European Central Bank to push rates higher.
``Year-on-year growth will edge down in the coming months,'' said Martin Van Vliet, an economist at ING Bank in Amsterdam. ``It's still too early to consider a pause'' in interest-rate increases. The ECB will ``err on the side of caution after June and go to 4.25 percent.''
Wage Increases
The euro-zone economy grew more than expected in the first quarter, expanding 0.6 percent, while U.S. growth slowed to a four-year low of 0.3 percent. Record-low unemployment is boosting domestic demand in Europe, fueling concern that wage increases will spark inflation.
The ECB is set to raise interest rates for the eighth time since the end of 2005 next week. Jean-Phillipe Cotis, chief economist at the Organization for Economic Cooperation and Development said yesterday he expects at least one additional move after the ECB lifts its benchmark rate to 4 percent this month.
Manufacturing growth is driving employment gains. Economists say European joblessness probably held at 7.2 percent in April, the lowest since region-wide records began in 1993, according to the median forecast of 39 responses in a Bloomberg News survey. The EU's Luxembourg-based statistics office will publish the report at 11 a.m. local time today.
DAF Trucks NV, the Dutch division of U.S. truckmaker Paccar Inc., said it plans to increase production at its main plant by about 5 percent next month as European freight transporters expand fleets to handle the increased flow of goods within Europe. MAN AG, Europe's no. 3 truckmaker, reported record earnings as sales increased in eastern Europe.
Confidence Rising
European business and consumer confidence both rose in May to the highest level since 1991, a report showed yesterday. German investor confidence jumped to an 11-month high in May as economists ratcheted up their growth forecasts for Europe's largest economy. The government increased its 2007 growth forecast to 2.3 percent from 1.7 percent in April.
European growth will ease to an annual 2.2 percent pace by the fourth quarter from 3.1 percent in the first as slower U.S. growth trims global demand, according to the median of 16 estimates in a Bloomberg News Survey of economists.
Retail sales in the euro area fell for the first month in three in May and French business confidence declined, further signs that the expansion may be abating.
``In the U.S. we expect the market's growth to be significantly lower in 2007 compared with 2006,'' Alexandre Saubot, chief executive officer of Haulotte Group, a French maker of cherry-picker trucks for roofers, said May 14.
Thales SA Chief Executive Officer Denis Ranque said orders at Europe's largest defense-electronics company peaked in the first quarter.
So far, faster economic growth in Asia is easing the effect of the U.S. slowdown. Alstom SA, the world's second-biggest train maker, said full-year profit more than doubled as China upgraded its rail network.
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