Higher industry orders add to signs of German economic rebound

German industrial orders rose more than expected in October, fuelled by stronger demand from the euro zone, signalling that Europe's largest economy may be gaining steam as the year comes to an end. The data, published a day after the European Central Bank surprised financial markets by announcing only modest monetary stimulus, suggested Germany is weathering the slowdown in emerging markets like China and Brazil thanks to stronger demand closer to home.
It provides ammunition to monetary hawks like Bundesbank President Jens Weidmann, who broke with many of his colleagues at the ECB and opposed even the more modest than expected steps. Contracts for German goods were up by 1.8 percent on the month, beating a Reuters consensus forecast for a rise of 1.2 percent. In addition, the decline in September was revised to 0.7 percent from a previous reading of 1.7 percent.
"This confirms our view that Germany's economy remains in a robust recovery," said Thomas Strobl, an economist at Unicredit, noting that he expected gross domestic product to expand by 0.6 percent in the fourth quarter. The ministry said the data pointed to a "tentative recovery" in the industrial sector.
Weidmann said in a separate release from the German central bank that an expected rebound in export markets outside the euro zone meant that "the healthy underlying state of the German economy should stand out even more clearly over the next two years." The Bundesbank said it expected the economy to expand by 1.7 percent in 2015, 1.8 percent in 2016 and 1.7 percent in 2017.
In the orders data, demand from the euro zone rebounded 2.4 percent following a fall of 4.7 percent in September, driven mainly by a 9.2 percent rise in the consumer goods sector. VP Bank Group economist Thomas Gitzel said the reverse trend would translate into increased productivity and job security. "The debt-plagued countries in the single currency area are enjoying a comeback, which benefits the German economy," Gitzel said. Business morale unexpectedly rose in November to its strongest reading since June 2014. The BGA wholesalers' and exporters' body in October raised its forecast for export growth for 2015, citing healthy demand from Europe and the United States.