German Industrial Orders Rise

Higher demand at home and abroad for goods needed in production drove the biggest monthly increase in German industrial orders in around 2-1/2 years in December, suggesting the first quarter of 2017 may be getting off to a strong start.

The much stronger-than-expected data, released by the economy ministry in Berlin on Monday, gave some reassurance that Germany’s economic upswing will carry into 2017 despite growing political uncertainties that include the potentially protectionist US trade agenda, Reuters reported.

“A sensationally strong quarter in the manufacturing sector,” Sal. Oppenheim economist Ulrike Kastens said, adding that the figures were pointing to an overall economic recovery in the eurozone.

“Despite the political uncertainties, the German economy is showing a more than robust development,” Kastens said, adding she now expected quarterly growth of around 0.6% in the first quarter after 0.5% in the final quarter of 2016.

In a sign that private consumption will continue to boost German growth, nominal wages rose 2.3% in 2016, separate data from the Federal Statistics Office showed on Monday.

With national inflation at 0.5% last year, real wages increased by 1.8%, the office said. This was less than the 2.4% in 2015 and 1.9% in 2014.

Orders for “Made in Germany” goods were up by 5.2% on the month, the economy ministry said. That was the biggest monthly increase since July 2014 and was far stronger than the Reuters consensus forecast for a rise of 0.5%.

Domestic demand jumped by 6.7% while foreign orders increased by 3.9%, with bookings from eurozone countries soaring by 10%.

The overall increase was driven by a jump in demand for capital goods for production rather than consumption of 9.7%, helped by strong bookings from both domestic customers and eurozone countries.