November 6, 2017 / 8:02 AM / 6 months ago

UPDATE 1-Surprise jump in German industrial orders bodes well for growth

* Factories register more orders for capital goods

* Especially strong demand from other euro zone countries

* Surprise rise bodes well for growth in final quarter (Adds data details, analysts)

By Michael Nienaber

BERLIN, Nov 6 (Reuters) - German industrial orders rose unexpectedly in September, driven by strong demand from other euro zone countries for capital goods including machines and vehicles, suggesting the economy will extend its solid upswing into the coming months.

Manufacturing orders rose 1.0 percent, after contracts for ‘Made in Germany’ goods rose by an upwardly revised 4.1 percent in August, Economy Ministry data showed. The September reading easily beat a Reuters forecast for a 1.5 percent fall.

“Industry is proving its role as a driving force for overall growth. It will propel growth also in the current quarter,” Bankhaus Lampe economist Alexander Krueger said, adding that firms in Europe’s biggest economy were benefiting from the upswing in the euro zone.

A data breakdown showed domestic demand edged down 0.1 percent while orders from abroad rose 1.7 percent, and 6.3 percent from euro zone customers.

The headline increase was driven by a rise in demand for capital goods, with orders from euro zone clients in that category surging 14.1 percent.

“Things are going well for the German economy,” VP Bank analyst Thomas Gitzel said, noting that the main boost was coming from other euro zone countries.

“This shows again that the upswing in the single currency bloc is not a flash in the pan,” Gitzel said. The data suggested the economy was set for strong growth rates in the second half of the year.

It grew 0.7 percent on the quarter in the first three months of the year and 0.6 percent from April to June, propelled by increased household and state spending as well as strong investment in buildings and equipment.

Gross domestic product (GDP) growth data for the third quarter will be published on Nov 14.

The government expects the economy to expand by 2 percent this year, which would translate into a calendar-adjusted rate of 2.2 percent.

“Order activity has gained further momentum from an already high level,” the Economy Ministry said, adding that it expected the manufacturing sector’s upswing to continue. (Reporting by Michael Nienaber; Editing by Tom Sims and John Stonestreet)

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