Europe's Largest Economy Bounces Back

A large increase from investment goods used in production of final goods, indicates a strong demand for machine tools and other German specialty goods.

Industrial orders in Germany rose 2.8% in April from March, the government said, topping the 1.9% expected according to analysts polled by Dow Jones Newswires.

In March, orders for industrial goods fell a revised 2.7%, the first drop this year but much better than the initially reported fall of 4%.

In April, foreign orders gained 3.4% while those from within Germany were 2.1 percent higher, the provisional data showed.

The strongest increase came from investment goods used in the production of final products, a 4.9% hike that signalled sustained demand for machine tools and other German specialty goods.

The revised figure for March "throws an even more favorable light on the result" in April, Postbank economist Heinrich Bayer noted.

A large number of bulk orders was recorded, compared with March, which analysts said could be the result of uncertainty following the Japanese earthquake and tsunami that month.

Although the pace of increases in industrial orders and production has slowed this year, the latest data "bodes well for continuing solid production dynamic throughout 2011," UniCredit economist Alexander Koch said.

The German economy is expected to expand by 2.6% this year following growth of 3.6% in 2010 but Chancellor Angela Merkel has indicated the forecast could be raised above 3% in the coming months.

Copyright Agence France-Presse, 2011

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