German Manufacturing Orders Surge in Sign of Robust Growt

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Employees assemble the body shell of a Volkswagen Phaeton automobile on the production line at the Volkswagen AG factory in Dresden, Germany.
Employees assemble the body shell of a Volkswagen Phaeton automobile on the production line at the Volkswagen AG factory in Dresden, Germany.
Photographer: Krisztian Bocsi/Bloomberg

German factory orders surged in June in a sign of robust growth in Europe’s economic powerhouse.

Orders, adjusted for seasonal swings and inflation, rose 2 percent after sliding a revised 0.3 percent in May, data from the Economy Ministry in Berlin showed on Thursday. The typically volatile number compares with a median estimate of a 0.3 percent increase in a Bloomberg survey. Orders jumped 7.2 percent from a year earlier.

Germany, Europe’s largest economy, is benefiting from the lowest unemployment rates since the country’s reunification and a euro area that is being reinvigorated by European Central Bank stimulus and low oil prices. While the stand-off between Greece and its creditors caused a drag on some segments of the economy, the Bundesbank predicts “quite robust” growth for this year.

“The fundamental upward economic trend in Germany is intact,” said Andreas Rees, chief German economist at UniCredit Bank AG. “But with such a high number one must say, to be fair, that this occurred mainly because of bulk orders in the aviation sector.”

Airbus SAS, one of the world’s largest commercial aircraft manufacturers that assembles most of its single-aisle planes in Hamburg, received 135 aircraft orders in June, up from the 18 orders placed the previous month. China ordered as many as 75 A330 jets worth about $18 billion at list prices, Premier Li Keqiang announced on June 30.

Export Orders

Export orders jumped 4.8 percent in June, driven by an 8.8 percent increase in investment-goods demand from outside the euro area, the ministry said. Domestic factory orders dropped 2 percent. Total orders rose 3 percent in the second quarter from the previous three months.

The euro rose after the report was published and was up 0.1 percent at $1.0916 at 8:35 a.m. Frankfurt time.

“The trend for factory orders is clearly pointing upward,” the ministry said. “German industry should maintain its path of moderate growth in the coming months.”

Measures of optimism among German businesses improved in July as concerns eased over Greece’s crisis, and economists predict growth accelerated to 0.5 percent in the second quarter from 0.3 percent in the previous three months. In a sign that risks remain, a gauge of manufacturing indicated weaker growth as exports fell for the first time in six months.

“If you look at the fundamentals behind the German economy, they are strong,” said Aline Schuiling, senior economist at ABN Amro Bank NV in Amsterdam. “We had a sharp drop in energy prices, that will support the economy, we have a weak euro, and of course we have incredibly low interest rates.”

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