German factory orders in Nov beat estimates

Private consumption is driving growth in Germany, Europe's largest economy, just as government spending tied to a refugee influx adds extra stimulus.
Private consumption is driving growth in Germany, Europe's largest economy, just as government spending tied to a refugee influx adds extra stimulus.PHOTO: REUTERS

Basic-goods orders climb the most in five years on domestic demand, weaker euro

BERLIN • German factory orders rose more than economists anticipated in November as demand for basic goods surged the most in almost five years.

Total orders, adjusted for seasonal swings and inflation, gained 1.5 per cent from October, when they were up a revised 1.7 per cent, data from the Economy Ministry showed yesterday .

The reading, which tends to be volatile, compares with a median estimate for a rise of 0.1 per cent in a Bloomberg survey. Orders climbed 2.1 per cent from a year earlier.

With unemployment at the lowest level since German reunification and wages rising, private consumption is driving growth in Europe's largest economy just as government spending tied to a refugee influx adds extra stimulus.

Exporters are benefiting from a weaker euro as they shift their focus from slowing emerging markets such as China to recovering economies such as the United States.

"German companies aren't allowing the various crises to spoil their optimism," Mr Torsten Windels, chief economist at NordLB in Hanover, said before the report.

"Rising investments as well as an increase in private consumption will drive the German economy in 2016."

In a separate report, the Federal Statistics Office said German retail sales rose 0.2 per cent in November from October, when they declined a revised 0.1 per cent. Economists had predicted a 0.5 per cent rise.

Basic-goods orders rose 4.8 per cent in November, driven by domestic demand, the ministry said in a statement. Total orders from within the country rose 2.6 per cent.

Euro zone orders fell 0.5 per cent after a 2.6 per cent jump in October, while demand from outside the currency bloc was up 1.4 per cent. Bulk orders were slightly below average in November.

The BGA trade group estimates that German exports gained as much as 6 per cent last year, with imports up about 4 per cent. It predicts both will reach record highs in 2016.

Shipments to the US jumped more than 20 per cent in the 10 months through October from the previous year, while sales to China slipped 4.2 per cent, according to data from the German statistics office.

Data for November will be released today, alongside the latest industrial production report.

"After orders receded in the third quarter, a moderate revival in manufacturing seems to be taking hold," the ministry said. "Sentiment indicators in the industry also send positive signals."

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on January 08, 2016, with the headline 'German factory orders in Nov beat estimates'. Print Edition | Subscribe