BRUSSELS (Reuters) - New orders for the euro zone’s factory goods fell in January as businesses struggled to put the worst of the debt crisis behind them and the cooling Chinese economy underscored the fragility of the bloc’s recovery.
Manufacturing orders in the 17 countries that share the euro fell 2.3 percent from December, the European Union’s statistics office Eurostat said on Thursday, roughly in line with expectations of a 2.1 percent fall in a Reuters’ poll.
The euro zone’s sick economy was evident in the weak annual Eurostat data, as industrial orders fell 3.3 percent in January versus the same period a year ago, slightly worse than an expected fall of 3.0 percent.
EU policymakers are betting that demand from the healthier economies of the United States and China will pull the euro zone out of its second recession in three years at a time of job cuts and budget austerity at home that is doing little for growth.
But surveys showing a second successive fall in manufacturing and services activity in March in the euro zone, released separately on Thursday, suggested that foreign demand is muted and may not be enough to help Europe.
Rising oil prices could also become a stumbling block for growth as they force businesses to pay more for energy and limit their ability to compete and hire more staff.
“The economy stabilized at the start of the year but that doesn’t mean there is going to be a strong recovery,” said Carsten Brzeski, ING’s senior economist for the euro zone. “The surveys show you can’t count your chickens before they hatch.”
China cut its growth target to 7.5 percent in 2012 from the 8 percent goal in each of the previous eight years, citing the European debt crisis and a shrinking market for its goods.
The European Commission expects the euro zone’s economy to contract 0.3 percent in 2012, with growth returning towards the end of the year - assuming that EU leaders continue to reassure financial markets that they are moving to resolve the crisis.
The European Central Bank sees economic growth in a range between minus 0.5 percent and 0.3 percent in 2012 and between zero and 2.2 percent in 2013.
ECB President Mario Draghi warned earlier this month that any recovery will be “very, very gradual, if not slow”.
Reporting by Robin Emmott; editing by Rex Merrifield