German Industrial Orders Bounce Back in January

Domestic orders spiked 7.1%

Gaining 4.3% from December, German industrial orders posted a sharp rebound in January. The jump was the biggest since December 2004 and provided a welcome shot in the arm for Germany, where economic activity stagnated in the last quarter of 2009 and harsh winter weather kept construction work on hold early this year.

Provisional figures released by the economy ministry showed a domestic order spike of 7.1% in January, as the overall figure came in almost three times higher than an analyst forecast compiled by Dow Jones Newswires.

Foreign orders were 1.9% stronger, the data showed.

"Today's numbers clearly support the view that despite some recent disappointments, the recovery remains healthy," ING senior economist Carsten Brzeski commented.

In December, industrial orders had declined by 1.6%, revised figures showed, and analysts had penciled in a rise of 1.5% this time around.

"The main driver here was domestic demand for investment goods," which was 10% stronger, UniCredit economist Alexander Koch said in reference to the jump in domestic orders.

Although the "temporary massive impulse from the inventory cycle and fiscal programs will inevitably moderate" later this year, "for the time being the tailwind remains ample," he added.

Germany is recovering from its worst slump since World War II, with gross domestic product declining by 5% in 2009.

As consumption and exports gradually recover, the government has forecast growth of 1.4% this year.

German retail sales were stable in January, meanwhile, despite some of the worst weather in more than 30 years, raising hopes that shoppers might also help get economic activity back on track.

Copyright Agence France-Presse, 2010

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