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Strong Domestic Demand Cause German Industrial Orders Rebound

April 6, 2017
"German new orders have woken up from hibernation... partly offsetting the January shock," which had originally been calculated as a 7.4%, according to   economist of ING-DiBa bank.

Industrial orders in Europe's biggest economy Germany rebounded 3.4% in February after a sharp drop the previous month, preliminary official data showed on April 6.

New orders -- a closely watched indicator of future economic performance -- had fallen a revised 6.8% in January, adjusting for price, seasonal and calendar effects, said the federal statistics office Destatis.

The rebound in the indicator, which has been highly volatile in recent months, was roughly in line with analysts' expectations.

"German new orders have woken up from hibernation... partly offsetting the January shock," which had originally been calculated as a 7.4% drop, wrote Carsten Brzeski, chief economist of ING-DiBa bank.

"The increase in new orders was exclusively driven by stronger domestic demand. Foreign demand remained stable."

Excluding very large single contracts, which can distort the statistic, orders rose by 2.2% in the month.

Domestic orders rose 8.1% while those from abroad stayed unchanged.

Those from other eurozone economies dropped for a second month in a row, by 2.4%, which Brzeski judged "a bit worrisome" and "a slightly disappointing note to the current picture of a eurozone recovery".

Comparing the January-February period to the November-December stretch, industrial orders fell 2.4 %, said the economy ministry, pointing to equal declines in domestic and foreign orders.

The ministry said that economic data overall, including a rise in business confidence, still pointed to "a slight recovery in industrial activity".

Heightened uncertainty has weighed on the export power since June 2016, when Britain voted to quit the EU, and been sustained by Donald Trump capturing the White House on a protectionist platform, as well as upcoming elections in France, and Germany.

Brzeski wrote that "German order books seem to be extremely moody", also reacting sensitively to seasonal and weather fluctuation.

"Looking through this high volatility, the trend for order books is slightly positive, though still not as positive and strong as current confidence indicators are suggesting.

Copyright Agence France-Presse, 2017

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