German Factory Orders Rose in March in Sign of RecoveryStefan Riecher
German factory orders unexpectedly jumped for a second month in March, suggesting Europe’s largest economy is starting to grow again.
Orders, adjusted for seasonal swings and inflation, increased 2.2 percent from February, when they also advanced 2.2 percent, the Economy Ministry in Berlin said today. Economists forecast a 0.5 percent drop, according to the median of 39 estimates in a Bloomberg News survey. In the year, workday-adjusted orders fell 0.4 percent.
While the coldest March in 25 years may have delayed the economy’s recovery from a slump at the end of 2012, Bundesbank President Jens Weidmann said on April 13 he doesn’t share the pessimism over the outlook. Unemployment held close to a two-decade low last month, even as business and investor confidence declined.
“Today’s data are an extremely positive surprise,” said Heinrich Bayer, an economist at Deutsche Postbank AG in Bonn. “They give reason to hope not only that German industry will emerge from its trough, but also that the euro area could be on the brink of an economic recovery, even if only a moderate one.”
The euro rose more than a quarter of a cent on the report to $1.3113, up 0.3 percent on the day. European stocks climbed as banks from Societe Generale SA to Commerzbank AG reported results that topped analyst estimates. The Stoxx Europe 600 Index rose 0.3 percent to 301.80
Orders for German exports rose 2.7 percent in March, with those from the euro area surging 4.2 percent, today’s report showed. Domestic sales gained 1.8 percent. While consumer goods orders fell 0.7 percent, those for intermediate goods increased 3.6 percent and orders of investment goods climbed 2 percent.
“This is favorable for the industrial economy,” the ministry said. “German industry seems to be gradually overcoming its weak phase.”
Bulk orders were “significantly above average” in March, helping to drive a 0.4 percent gain in the first quarter, it added.
The Federal Statistics Office in Wiesbaden is due to report its first estimate for first-quarter gross domestic product on May 15. The economy shrank 0.6 percent in the final quarter of last year.
The European Commission last week cut its projections for the euro area, Germany’s biggest export market. It predicts the 17-nation economy will shrink 0.4 percent this year after a 0.6 percent contraction in 2012.
“The risks surrounding the economic outlook for the euro area continue to be on the downside,” European Central Bank President Mario Draghi said last week after the ECB lowered its benchmark interest rate to a record low of 0.5 percent.
Siemens AG, Europe’s largest engineering company, reduced its full-year forecast on May 2 after quarterly earnings missed analyst estimates.
Elsewhere in Europe, French industrial output fell 0.9 percent in March, national statistics office Insee said, as President Francois Hollande struggles to keep Europe’s second-largest economy from falling into recession for the third time in four years.
Swiss unemployment held at the highest level in two years in April, indicating that the economy remains vulnerable to the strong franc. At 3.1 percent, it’s still about a quarter of the 12.1 percent jobless rate in the euro area.
In Asia, the Reserve Bank of Australia cut its benchmark interest rate to a record low of 2.75 percent, driving down a currency that has damaged manufacturing and boosted unemployment. In the U.S., job openings data for March will be released later today.
Some German companies are compensating for weaker demand at home with exports to faster growing markets.
Beiersdorf AG, the maker of Nivea skin cream, reported first-quarter profit on May 2 that exceeded estimates as higher emerging-market sales countered a drop in western Europe. Industrial gases maker Linde AG also posted a better-than-forecast first-quarter profit yesterday.
“Despite less than favorable conditions, especially in the mature markets, we have continued to achieve profitable growth,” Chief Executive Officer Wolfgang Reitzle said.
German new car registrations, an indicator for private consumption, rose for a third month in April, and market research company GfK predicts that consumer confidence will climb to the highest in more than 5 1/2 years this month.
“Germany is finding its way back to growth very slowly,” said Ralph Solveen, an economist at Commerzbank AG in Frankfurt. “The economy probably stagnated in the first quarter or grew just a little bit.”