German Factory Orders Beat Forecast in Sign Economy Recovering

By Alessandro Speciale  

Photographer: Martin Leissl/Bloomberg

An employee uses a winch to position a cog in the industrial printing press... Read More

German factory orders (GRIORTMM) rose more than forecast in October in a sign Europe’s largest economy is continuing its recovery from a mid-year dip.
Orders, adjusted for seasonal swings and inflation, climbed 2.5 percent after a revised increase of 1.1 percent in September, data from the Economy Ministry in Berlin showed today. Economists predicted an increase of 0.5 percent, according to the median of 37 estimates in a Bloomberg News survey. Orders grew 2.4 percent from a year earlier.
Germany’s economy barely expanded last quarter after contracting in the three months through June, and the Bundesbank has said growth will lack momentum until at least the end of the year. The euro area, the country’s biggest trading partner, is struggling to avoid
stagnation, prompting the European Central Bank to prepare further stimulus measures that can be used if needed.
“The disappointing numbers over the past few months are the reflection of extremely muted domestic investment demand,” said David Milleker, chief economist at Union Investment GmbH in Frankfurt. “Capacity utilization itself has remained quite high, so investment actually should be decent.”
Domestic factory orders led the October gain with a jump of 5.3 percent, compared with an increase of 0.6 percent in export orders, today’s report showed. Investment goods gained 3 percent and basic goods rose 2.5 percent. Orders for consumer goods fell 0.1 percent.

ECB Stimulus

Latest data show a mixed picture for the German economy. While business confidence increased for the first time in seven months in November, manufacturing and services expanded at the slowest pace in 16 months.
Deutsche Bahn AG, the largest supplier of overland transport in Europe, will invest 200 million euros ($248 million) over the next three years to improve quality and punctuality in long-distance rail travel, according to Sueddeutsche Zeitung, citing an interview with Chief Executive Officer Ruediger Grube.
The ECB yesterday cut its economic-growth and inflation forecasts for the euro area through 2016. The Governing Council expects to consider a proposal for a broad-based asset program that includes sovereign debt at its next monetary-policy meeting on Jan. 22, according to two euro-area central-bank officials familiar with deliberations.