Tuesday 19 September 2017

Demand from outside EU helps German factory orders beat estimates

Joseph de Weck

German factory orders rose more than economists forecast in March as demand from outside the euro area helped Europe's largest economy weather the debt crisis.

Factory orders, adjusted for seasonal swings and inflation, jumped 2.2pc from February, when they gained a revised 0.6pc, the Economy Ministry in Berlin said yesterday.

Economists had predicted a 0.5pc increase. Compared to a year ago, orders dropped 1.3pc when adjusted for work days.

German companies are tapping faster-growing emerging markets as the debt crisis curbs demand in the euro region. Business confidence climbed to a nine-month high last month and investor sentiment unexpectedly rose to a two-year high. Still, economic growth will slow to 0.6pc this year from 3pc in 2011, according to the Bundesbank, as fellow euro-area members drop back into recessions.

Positive surprise

The latest factory data is "a very positive surprise," said Klaus Baader, senior economist at Societe Generale in Hong Kong. "The numbers show that despite the crisis in the euro area, Germany is growing and benefiting from a revival in international trade."

The euro rose against the dollar after the report was issued. It had fallen after Francois Hollande won the French presidency and Greek voters stripped the ruling coalition of its majority, igniting concern that the region is losing its appetite for austerity.

The report showed domestic factory orders rose 1.3pc in March while export orders climbed 3pc, driven solely by a 4.8pc increase in sales outside the euro area. Orders from within the currency bloc were unchanged from February, when they fell 3.3pc.

Orders for investment goods rose 4.2pc and those for consumer goods jumped 5pc. Basic goods orders slipped 1.1pc.

The Economy Ministry said overall orders fell 0.7pc in the first quarter from the fourth quarter of 2011.

"After the expected weakness in winter, the trend is gradually turning positive again," the ministry said. (Additional reporting Bloomberg)

Irish Independent

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