World Economy

Upswing in German Manufacturing Will Continue

Upswing in German Manufacturing  Will ContinueUpswing in German Manufacturing  Will Continue

German factory orders unexpectedly rose for a second month, adding to signs that Europe’s largest economy will continue expanding at a solid pace.

Orders, adjusted for seasonal swings and inflation, increased 1% in September after an upwardly revised surge of 4.1% in August, data from the economy ministry in Berlin showed on Monday, Bloomberg reported.

The typically volatile reading compares with a median estimate for a 1.1% decline in a Bloomberg survey. Demand was up 9.5% from the previous year.

Germany is on track for continued robust growth in the third quarter, according to the Bundesbank, with manufacturing set to remain a “pillar” of the upswing thanks to “vigorous” export demand and an “excellent” level of orders. Strong momentum in the 19-nation euro region and the European Central Bank’s decision to extend asset purchases into 2018 will also support the economy.

“Order activity increased further from an already high level,” the economy ministry said in a statement. “Improved business confidence suggests that the upswing in manufacturing will continue.”

September orders were bolstered by a 14.1% jump in demand for investment goods from the eurozone, according to the report. Domestic orders slipped 0.1% from the previous month while export demand was up 1.7%. Bulk orders were below average.

Meanwhile, German services PMI fell to 54.7 in October down from 55.6 in September, but still indicating a robust rate of expansion. Inflows of new work rose at the fastest pace for 20 months in October, signaling a backdrop of robust demand, and job creation also picked up to show the strongest increase in tertiary sector employment since May.  

Final Composite PMI for Germany decelerated to 56.6, down from September’s 77-month high of 57.7.

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