Industrial orders climb in June

Industrial orders climb in June
Photo: DPA
Perhaps heralding improving prospects for Germany's export-led economy in the second half of the year, industrial orders surged in June.

Orders jumped by 4.5 percent in June in following a 4.4-percent rise in May, the Economy Ministry said on Thursday, adding that prospects for the key sector had improved.

Analysts polled by Dow Jones Newswires had forecast a much smaller increase of 0.9 percent in the widely-watched indicator for Europe’s biggest economy.

“The strength in demand came in the end from foreign orders which increased by 8.3 percent,” despite a rise in the euro’s value, the ministry said in a statement, especially good news for the country’s export-oriented economy.

“After a collapse last winter, industrial orders have risen for the fourth month in a row. The strongest demand has come from abroad but domestic orders are also picking up markedly,” it added.

Recent economic indicators have been particularly positive in Germany, suggesting it could pull out of its worst recession in 60 years more quickly than previously thought.

“The surprisingly good result in industrial orders bodes well for industrial production in the coming months,” Postbank analyst Thilo Heidrich commented.

Authorities nonetheless expect economic activity to contract by around 6.0 percent for the year as a whole. Like Japan, another big exporter, Germany has been hit hard by the global economic slump but is well positioned to benefit from a pick up in countries like China and the United States.

Following a contraction of 3.8 percent in gross domestic product in the first quarter, the German economy is forecast to shrink by a much smaller amount in the second, before expanding in the second half of the year. That scenario is threatened however by a possible credit squeeze and rising unemployment.

The industrial order figures contained a note of caution as well, with those for big ticket items slightly below average, the ministry said. Manufacturing orders in general were 25.3 percent below the level of June 2008 moreover, suggesting the key sector is emerging only slowly from the country’s deep recession.

But on a two-month basis which smooths out some volatility, manufacturing orders were 6.8 percent higher in May and June from the March-April period. And demand for capital goods was particularly healthy in June, as orders in rose by five percent from May. On balance, “the prospects for a pickup in industrial production in the coming months have improved further,” the ministry said.

The German data came a day after a key purchasing managers index for the entire 16-nation eurozone rose for the fifth month running.

The Markit survey found that activity in the manufacturing and services sector posted its highest reading since August 2008, with the data buoyed by near-stabilisation in Germany.

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