LONDON — Economic data gave more evidence Monday that Europe and Asia are on the mend, while a top Chinese leader cautioned against blind optimism and said the world economy still faced “many new difficulties.”
Figures from the European Union statistics office Eurostat showed that industrial orders in the 16 countries that use the euro rose 3.1 per cent in June from the quarter before, suggesting the manufacturing sector could be emerging from recession.
New orders — a key gauge of industry’s future growth — rose in both France and Germany, as well as Ireland, which has been among the hardest-hit by the global economic crisis. The figure was almost twice as strong as the 1.6 per cent monthly increase that analysts were expecting.
Any recovery will begin from a far lower base, however, as activity was still much weaker than last year with new orders down 25.1 per cent over 12 months. Experts had been braced for an even bigger fall of 28.6 per cent.
The euro-zone pickup in orders was the latest in a run of surveys showing a marked improvement in the euro zone economy. Most eye-catching was the surprising news that the recessions in Germany and France, the euro zone’s two largest economies, ended in the second quarter of the year, while the euro zone as a whole shrank by only 0.1 per cent.
The picture was gloomier across the wider 27-nation EU, where industrial orders were down 0.4 per cent on the month, and 24 per cent on the year.
Meanwhile, a survey for Britain showed that business confidence rose between May and August to its highest level in two years. The Institute of Chartered Accountants in England and Wales said the business community was largely more optimistic than not for the first time since the May-August period of 2007 — before the global financial crisis erupted and Britain fell into recession.
Michael Izza, the institute’s chief executive, said the survey suggested Britain’s recession was “at an end.”
In Asia, Thailand’s economy emerged from recession in the second quarter as manufacturing grew and the government boosted spending. The state planning agency said Monday that gross domestic product expanded 2.3 per cent from the first quarter in seasonally adjusted terms, although the economy was still expected to shrink between 3 per cent and 3.5 per cent in 2009 compared with 2008.
Chinese Premier Wen Jiabao cautioned against being “blindly optimistic” despite improvements in the economy, according to a statement on the government’s Web site.
The economy “still faces many new difficulties and problems,” Wen was quoted as saying during a visit to southeastern China that ended Monday.
Wen has repeatedly warned against complacency and assurances that easy credit will continue. The warnings have clashed with the increasing optimism shown by analysts who say China is making dramatic progress in emerging from its slump.
Beijing is in the midst of a two-year, 4 trillion yuan ($586 billion) effort to boost domestic consumption by pumping money into the economy through higher spending on building highways and other public works.
Driven by that spending, economic growth accelerated to 7.9 per cent in the latest quarter, up from the previous quarter’s 6.1 per cent. Some observers think China could play a key role in leading the world out of its worst downturn since the 1930s.
Analysts will be particularly interested to see if the closely watched Ifo Institute survey into German business sentiment, which is due on Wednesday, provides further evidence of an improving economy — Germany’s fortunes are tied up with a pickup in world trade.
Investors will be focusing on U.S. economic data this week, most notably consumer confidence figures from the Conference Board on Tuesday. In particular, they will be looking to see if ongoing increases in unemployment more than offset hopes of an improvement in the wider economy.
Investors are fully aware that without the support of the U.S. consumer, which accounts for around 70 per cent of the U.S. economy and 20 per cent of the global economy, recovery will be muted at best.