German Factory Orders Rebound More Than Expected

Germany’s factory orders rebounded at a stronger-than-expected pace in August reflecting the robust expansion in demand for computing, electronic and optical products.

Factory orders registered a monthly growth of 3.9 percent, in contrast to the 11.3 percent decrease in July, Destatis reported Friday. Moreover, the rate was much better than economists’ forecast of 1.8 percent growth.

Excluding major orders, manufacturing orders were 3.9 percent bigger than in July.

Year-on-year, the decline in manufacturing orders slowed to 4.2 percent from 10.1 percent in July, data showed.

The strong monthly growth in new orders was driven by higher demand for data processing equipment, electronic and optical products.

New orders in the intermediate goods sector advanced 9.3 percent and orders for consumer goods moved up 8.8 percent. Capital goods orders grew only 0.1 percent.

Data showed that foreign orders were up 3.9 percent on month and domestic orders posted a 4.0 percent gain.

Real turnover in manufacturing climbed 0.4 percent in August from the previous month, reversing a revised 0.9 percent drop in July.

Ralph Solveen, Commerzbank senior economist said incoming orders stabilized after a two-year decline. This itself improves the outlook for the coming months.

Nonetheless, he noted that the trend in sentiment indicators continues to point downwards. The economist expects Germany to contract again in the fourth quarter.

In the monthly report, released by the Bundesbank in September, the central bank said the German economy is set to shrink slightly in the third quarter as private consumption is unlikely to contribute positively.

Source: Read Full Article