German Factory Orders Rise as Economic Growth on Track

German factory orders rebounded in April from the biggest plunge in more than a year, signaling that growth in Europe’s largest economy remains on track.

Orders, adjusted for seasonal swings and inflation, increased 3.1 percent from March, when they declined 2.8 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a gain of 1.4 percent, according to the median of 34 estimates in a Bloomberg News survey.

While the German economy expanded 0.8 percent in the first quarter, beating estimates, the Bundesbank has warned that growth in the three months through June will slow as the effects of a mild winter wear off. The country is faced with low inflation and a weak recovery in the euro-area, its largest trading partner, and relied exclusively on internal demand to sustain growth at the start of the year.

“We see fairly balanced, robust growth in Germany at the moment,” said Alexander Koch, an economist at Raiffeisen Schweiz in Zurich. “There is volatility in the monthly data but everything points toward ongoing expansion this year.”

Export orders rose 5.5 percent in April from the previous month, and domestic orders were unchanged, today’s report showed. Orders for basic goods climbed 0.2 percent, investment-goods orders increased 4.4 percent, and consumer-goods orders advanced 7.1 percent.

The Bundesbank will present new economic forecasts tomorrow. In December, it predicted growth of 1.7 percent this year and 2 percent in 2015, with inflation averaging 1.3 percent and 1.5 percent, respectively.

ECB Decision

A gauge of German manufacturing and services activity remained near a three-year high last month and is consistent with growth of about 0.7 percent in the second quarter, according to Markit Economics.

Still, business confidence as measured by the Ifo research institute declined, unemployment unexpectedly increased and retail sales dropped for the first time in four months in April.

The European Central Bank will cut its benchmark interest rate to a record low today and take its deposit rate below zero for the first time, economists predicted in a separate Bloomberg survey.

ECB President Mario Draghi may also unveil unconventional measures to shore up inflation and rekindle growth after saying last month that the central bank was “comfortable” with acting in June. Inflation in the 18-nation currency bloc, which the ECB aims to keep just under 2 percent, fell to 0.5 percent last month.

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