Industrial New Orders increase more than forecast, fastest pace in four-years

Europe’s industrial sector continue to expand as Industrial new orders rose above expectations during the month of June, as conditions on a global scale improved and the recovery process strengthened, which supported demand over the past period.

Industrial new orders rose by 2.5 percent during the month of June, compared with the previous revised 4.1 percent a month earlier, while on the year the index rose by 22.6% compared with the previous revised 23.0% and the expected 24.0 percent.

Signs of slowing down have emerged from various sectors in the European economy but the major challenge for economic recovery continues to be elevated unemployment, sovereign debt problems and weak demand levels.

The improvement that is witnessed in the industrial new orders report is supported by the fact that the European common currency slumped to the lowest level in nearly 4-years against the dollar during the past few months, but the pair gained back and the euro ascended against the single currency, which could affect the performance of the economy over the upcoming period.

Trichet expects that third quarter fundamentals will be stronger than the preceding quarter, but with the rise in euro, the pessimism that dominates the market, along with sovereign debt problems and risk of stagflation, all these factors combined might alter the economic recovery and force the economy to slump into another contraction in the upcoming period.

Analysts project a slow and moderate growth pace over the course of this year in Europe after an impressive first half data that witnessed a growth rate of 1.0 percent during the second quarter of this year, along with improvement in various sectors in the economy.

Due to the fears of a slow-down in economic conditions, traders pressured indices to decline and slash all of yesterday’s trading gains led by selloffs in construction companies. Futures in the US fell before home sales data where expectations single that the existing home sales will slump further in the month of July by 13.4 percent, from the previous slump of 5.1 percent.

As of 10:16 GMT, the EUR/USD pair slumped to trade at .2620, compared with the opening levels of .2653, the GBP/USD pair sank to trade at .5416, compared with the opening levels of .5510. Gold extended its third consecutive trading day drop to reach 18.00 an ounce, where trading opened today at 25.80 an ounce.

Meanwhile, key benchmark indices in European markets traded lower, where the British FTSE 100 Index lost 62.78 points or 1.2 percent at 5172.06, CAC 40 was trading at 3502.83 down by 1.42 percent, As for Germany’s DAX 30, the index depreciated by 1.02% to trade at 5949.31