German Industry Orders Rise In February, Point To Strong First Quarter

[April 04, 2014]  By Sarah Marsh

BERLIN (Reuters) — Domestic demand drove a stronger-than-expected 0.6 percent rise in German industrial orders in February, Economy Ministry data showed on Friday, marking the fourth consecutive monthly gain and underscoring the pickup in Germany's mighty industry.

The increase in seasonally-adjusted orders beat the consensus forecast in a Reuters poll of 32 economists for a rise of 0.1 percent. The gain in January orders was revised downwards to 0.1 percent from an originally reported 1.2 percent.

Domestic orders were up 1.2 percent, driven by demand for intermediate and capital goods, while contracts from abroad inched up 0.2 percent.

"Order books are well filled ... and that supports the economy because production should remain strong," said Thomas Amend at HSBC Trinkaus, noting that mild winter weather had fostered the recovery in the industrial sector.

"Gross domestic product will likely grow slightly stronger in the first quarter than at the end of 2013."

Germany's export-oriented industry struggled to gain traction last year against the backdrop of a weak global economy. But it picked up towards the end of 2013 and looks set to perform better this year.

That is in line with the overall performance of the German economy, Europe's largest, which powered through the early years of the euro zone crisis but weakened towards the end of 2012 and start of 2013.

After growth of just 0.4 percent last year, economists expect expansion of around 1.8 percent in 2014, reflecting a pickup worldwide and particularly in the euro zone, emerging from its debt crisis.

The orders data on Friday showed a 12.2 percent surge in contracts from the euro zone for capital goods after a 18.1 percent drop in January. Overall orders from the euro zone were up 5.9 percent, contrasting with a 3.1 percent drop in orders from countries beyond the currency bloc.

"The decrease of orders from non euro zone countries indicates that the impact from emerging market woes at the beginning of the year on the real economy could be bigger than buoyant confidence indicators made us believe," said Carsten Brzeski at ING.

(Additional reporting by Stephen Brown and Rene Wagner)

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