German Factory Orders Surge as Domestic Demand Rebounds

  • Orders were up 1% from prior month vs. estimated 0.3% increase
  • Economy Ministry sees slight revival in months ahead

German factory orders jumped more than economists expected in August.

Photographer: Krisztian Bocsi/Bloomberg

German factory orders jumped more than economists expected in August on broad-based domestic demand, according to figures released by the Economy Ministry in Berlin.

Key Points

  • Orders, adjusted for seasonal swings and inflation, rose 1 percent from July, when they climbed a revised 0.3 percent
  • Increase is biggest since March, median forecast was for 0.3 percent gain
  • Orders were up 2.1 percent from a year earlier

Big Picture

The report comes after German business sentiment surged to the highest level in more than two years in September, a sign that corporate concerns over the consequences of Britain’s decision to leave the European Union are easing. Still, the number of Germans unemployed unexpectedly rose last month for the first time in more than a year, and the Bundesbank toned down its outlook, pointing to slower growth in the third quarter.

Economist Takeaways

“Today’s numbers bring some relief for German industry but are still far too little to become overly optimistic about the outlook for industrial production,” said Carsten Brzeski, chief economist at ING-Diba AG in Frankfurt. “In fact, German industry is still running low on fuel. New orders have literally been stagnating since last winter and even after today’s increase, domestic orders are still under-performing. Unless we see an entire series of similar data in the coming months, German industry will have troubles shifting to a higher gear.”

Other Details

  • German Economy Ministry says August orders rose 1.6 percent if demand for big-ticket items is excluded
  • Ministry sees slight pickup in manufacturing in remainder of year
  • Domestic demand rose 2.6 percent after 3.2 percent decline
  • Consumer-goods orders surged 2.9 percent, driven by demand from outside euro area
  • Orders for investment goods climbed 0.3 percent
  • Orders from the euro area rose 4.1 percent, bolstered by basic and investment goods

— With assistance by Andre Tartar, and Kristian Siedenburg

    Before it's here, it's on the Bloomberg Terminal.