German Factory Orders Surge on Demand for Investment GoodsPiotr Skolimowski
Orders jumped 4.9% in October vs. estimated gain of 0.6%
Increase led by 7.2% jump in orders for investment goods
German factory orders surged in October, suggesting growth in Europe’s largest economy will accelerate at the end of the year.
Orders, adjusted for seasonal swings and inflation, jumped 4.9 percent from September, when they fell a revised 0.3 percent, data from the Economy Ministry in Berlin showed on Tuesday. The increase was the biggest since July 2014, and compared with a median estimate of 0.6 percent in a Bloomberg survey. Orders gained 6.3 percent from a year earlier.
The report adds to signs that Germany’s economy is gathering pace after a slowdown in the third quarter. Business sentiment held at the highest level in more than two years in November, while unemployment remained at a record low. The Bundesbank predicts growth will accelerate “considerably” in the final three months of the year.
“We’re looking at a nice positive outlier that built on stronger growth in the U.S. and more demand in emerging markets,” said Carsten Brzeski, chief economist at ING-Diba AG in Frankfurt. “While data may point to a pickup in momentum in the fourth quarter, I’d still be cautious. Industrial output is not the growth driver that it used to be.”
The euro dropped after the report and traded at $1.0745 at 8:21 a.m. Frankfurt time.
The Economy Ministry will publish production data for October on Wednesday. Economists predict an increase of 0.8 percent, according to a separate survey.
Orders for investment goods climbed 7.2 percent in October, Tuesday’s report showed. Demand for basic goods gained 1.8 percent and that for consumer goods increased 0.5 percent. Domestic demand was up 6.3 percent and export orders rose 3.9 percent.