German Factory Orders Unexpectedly Strengthen

Germany’s factory orders unexpectedly expanded in January on strong foreign demand for aircraft and spacecraft construction and automobile engines, figures from Destatis revealed on Tuesday.

Factory orders grew 1.0 percent in January from December, confounding expectations for a decline of 0.9 percent. Nonetheless, the pace of growth eased from December’s revised 3.4 percent expansion.

Excluding large scale orders, there was an increase of 2.9 percent in new orders.

Year-on-year, manufacturing new orders declined at a faster pace of 10.9 percent after falling 9.9 percent in December.

Within overall orders, domestic orders dropped 5.3 percent on the previous month. Meanwhile, foreign orders advanced 5.5 percent driven by strong orders for aircraft and spacecraft construction and vehicle engines.

New orders from the euro area fell 2.9 percent. By contrast, orders from the rest of the world increased 11.2 percent.

Bookings in the capital goods sector advanced 8.9 percent in January. On the other hand, orders in the intermediate goods fell 8.9 percent and that in the consumer goods sector declined 5.5 percent.

Data showed that turnover in manufacturing increased 0.2 percent in January, reversing the 1.5 percent decrease in December.

There is no clear recovery in sight, so industrial production is more likely to weaken in the coming months, Commerzbank Senior Economist Ralph Solveen said.

Earlier in February, the Bundesbank projected the economic output to fall again in the first quarter. The bank said things could slowly pick up again as the year progresses.

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