German Factory Orders Beat Estimate as Euro-Area Recovers
Orders, adjusted for seasonal swings and inflation, jumped 3.3 percent from August, when they fell 0.3 percent, the Economy Ministry in Berlin said today. Economists forecast a gain of 0.5 percent, according to the median of 37 estimates in a Bloomberg News survey. Orders advanced 7.9 percent from a year ago, when adjusted for the number of working days.
Europe’s largest economy stands to benefit as the 17-nation euro area, its biggest export market, rebounds from a recession. Car sales in the currency bloc climbed the most in two years in September and economic confidence rose more than expected in October. The Bundesbank said last month that German gross domestic product probably expanded last quarter, albeit at a slower pace than in the three months through June.
Today’s data “is much stronger than expected and it shows some improvement in the German factory sector at the end of the third quarter,” said Annalisa Piazza, an analyst at Newedge Group in London. “We would not see today’s German orders as a sign of solid acceleration in factory activity but just a technical correction, consistent with a modest pace of increase in orders.”
The euro rose after the report. The currency was at $1.3518 at 12:46 p.m. in Frankfurt, up 0.3 percent today. European stocks remained higher, with the Stoxx Europe 600 Index gaining 0.6 percent.
Overseas orders climbed 6.8 percent in September, while those from within the country dropped 1 percent, today’s report showed. Demand from the euro area surged 9.7 percent as investment goods jumped 23.6 percent. Over a two-month period, international demand contracted while domestic orders rose, led by investment goods.
“Foreign demand continues to remain rather weak despite the September increase,” the ministry said in the statement. “The data confirm the picture of an increasingly domestically driven economic recovery.”
Volkswagen AG posted third-quarter operating profit on Oct. 30 that beat estimates as the financial contribution from the Porsche sports-car brand surged and the Wolfsburg, Germany-based automaker reined in spending.
German GDP probably rose 0.4 percent in the third quarter after expanding 0.7 percent in the prior three months, according to Bloomberg’s monthly economic survey published Oct. 10. The Federal Statistics Office is due to release preliminary growth data on Nov. 14.
The European Commission yesterday trimmed its growth forecast for the euro-area economy in 2014 to 1.1 percent from the 1.2 percent it predicted in May. Growth was 0.3 percent in the three months through June. European Central Bank officials are in Frankfurt tomorrow for their monthly policy meeting.
“The economic situation in Europe is still affected by some uncertainty but I’m confident we will see growth next year,” said Thilo Heidrich, an economist at Deutsche Postbank AG in Bonn. “The German economy is growing slowly but steadily and that’s good news for the entire euro area.”
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