German industrial orders recover in October

Last Updated: Thu, Dec 06, 2012 14:30 hrs

Industrial orders in Germany rebounded strongly in October, growing by 3.9 percent compared with the previous month, sending an unexpectedly hopeful signal about the strength of Europe's biggest economy.

The recovery in October was the strongest since January 2011 and followed a 2.4 percent decline the previous month, the economy ministry said Thursday. The September figure was revised up significantly from the initial reading of a 3.3 percent drop.

The rise came despite a below-average number of large orders and was led by a 6.7 percent increase in orders from abroad. That included a healthy 3.5 percent rise in demand from other countries in the 17-nation eurozone, many of which are struggling economically as the region's debt crisis drags on.

Germany's own growth has slowed this year but its economy is expected to continue growing, if unspectacularly, in 2013.

Economists had expected industrial orders to grow by only 1 percent in October. The outcome was reassuring, said Andreas Rees, an economist at UniCredit in Munich.

"It reinforces our long-held view that doom and gloom is not waiting for German companies," he wrote in a research note. But he noted that the September decline was still strong, there remain questions over the strength of domestic demand, and a much-watched business confidence index has only just begun to turn upward.

Carsten Brzeski, an economist at ING in Brussels, said that "German economy's safety net against the euro crisis had become dangerously thinner" over the summer, with orders declining — and that weakness is likely to be felt over the coming months. But Thursday's figures indicate that "the safety net is stabilizing again," he added.

"At least in Germany, green shoots seem to be sprouting during the winter," Brzeski said. "If this trend continues, the current growth worries for the eurozone's biggest economy could turn out to just be a tempest in a teacup."

In year-on-year terms, however, industrial orders were still 2.4 percent lower.

The German economy grew by 0.2 percent in the July-September period compared with the previous quarter. That compared with growth of 0.3 percent in the second quarter and 0.5 percent in the year's first three months.