German Industrial Orders Jump by 5.2%

Foreign demand was 8.2% stronger while domestic orders gained a more modest 1.5%.

Industrial orders gained a surprise 5.2% in November from the level in October, provisional data showed on Jan. 6, but revealed a slump in demand from eurozone partners.

Germany has the biggest economy in Europe and the performance of its export orientated industrial sector is a mainstay of activity across the European Union and 17-nation eurozone.

New orders rose by nearly 21% on a 12-month basis.

Analysts polled by Dow Jones Newswires had forecast a monthly increase of 1% following a rise of 1.6% in October, and the numbers indicated that the extra boost had come from outside Europe.

A breakdown of the data showed overall foreign demand was 8.2% stronger while domestic orders gained a more modest 1.5%.

Large foreign orders for investment goods such as machine tools and motor vehicles surged by 9.1% as expanding global activity boosted demand for German products.

But orders from eurozone partners declined by 1.4%, the third monthly decline in a row, underpinning forecasts that the now 17-nation bloc could be heading for a two or three-speed recovery as it battles a debt crisis.

Core countries such as France and Germany appear set for solid growth while others could stagnate or even slip back as austerity measures take effect and consumption is curtailed.

On a sliding two-month basis, eurozone orders fell by 8.5% in October and November compared with August and September.

The German economy ministry welcomed the overall result however, and took pains to underscore that the result was not only the result of large orders." The industrial sector is beginning the year with a good order book," a statement said.

ING senior economist Carsten Brzeski noted that "German companies had already piled up enough backlogs to keep production running smoothly throughout 2011 and the continuing inflow of new orders could even create production bottlenecks in the coming months."

The German central bank has forecast growth of 2% in 2011, with unemployment expected to decline further and companies tipped to take advantage of ultra low interest rates for investment programmes.

In Brussels meanwhile, a European Union indicator showed that confidence across the eurozone rose in December, pulled by strong readings in France and Germany. The European Commission's Economic Sentiment Indicator gained 1.1 points to 106.2 points. Eurozone data was mixed this week however, with retail sales falling by 0.8% in November while industrial orders rose by 1.4% in October.

Copyright Agence France-Presse, 2011

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