German factory orders jumped more than forecast for February
German factory orders rose almost five times as much as economists forecast in February, indicating growth in Europe's largest economy gathered pace in the first quarter.
Orders, adjusted for seasonal swings and inflation, gained 2.4pc from January, when they jumped 3.1pc, the Economy Ministry in Berlin said in a statement yesterday.
Economists had forecast a 0.5pc increase for February, according to the median of 33 estimates in a Bloomberg News survey. From a year ago, orders rose 20.1pc.
With German companies stepping up investment and hiring to meet booming export orders, the European Central Bank is poised to raise interest rates today to keep a lid on inflation.
The Bundesbank predicts German economic growth of 2.5pc this year after last year's record 3.6pc expansion, even as fellow euro-area economies such as Greece, Ireland and Portugal remain mired in a sovereign debt crisis.
"The mood in the German economy is very positive at the moment," said Ulrike Rondorf, an economist at Commerzbank AG in Frankfurt. "We can expect further rises in orders in the coming months."
Domestic factory orders rose 2.6pc from January and foreign orders gained 2.3pc, the report showed. Demand for investment goods surged 4.5pc.
Orders for big-ticket items were "strongly above average", the Economy Ministry said, adding that firmer domestic demand suggests the outlook for industrial production remains "favourable".
Production of plant and machinery, which represents about 15pc of German exports, will increase 14pc this year, the VDMA machine makers' association said this week, raising its forecast from 10pc.
Germany's SGL Carbon SE, the world's largest maker of carbon and graphite products, predicted operating profit will jump as much as 29pc this year as it invests in new technologies for lightweight construction and electric cars.
At the same time, German manufacturers are facing rising prices for energy, steel and aluminum as well as potential supply bottlenecks as a result of stoppages in Japanese plants after the March 11 earthquake and tsunami.