German Factory Orders Increased More Than Forecast in August
German factory orders rose more than economists forecast in August, indicating that economic growth continued to accelerate in the third quarter.
Orders, adjusted for seasonal swings and inflation, rose 1.4 percent from July, when they advanced a revised 3.1 percent, the Economy Ministry in Berlin said today. That was a sixth consecutive increase and exceeded the 1.1 percent median forecast of 38 economists in a Bloomberg News survey. Compared with a year earlier, orders were down 20.4 percent.
Europe’s largest economy pulled out of its worst recession in more than six decades in the second quarter as government stimulus measures stoked consumption and an export slump eased. While business and consumer confidence have risen to the highest in more than a year, rising unemployment may restrain domestic demand and curb the pace of recovery.
“We expect the economy to do well in the third quarter — the order data are looking good and exports are picking up,” said Sarah Hewin, an economist at Standard Chartered Bank in London. “But a lot of the support for the economy will start to fade in 2010, so as inventories normalize, and as the fiscal stimulus wanes and becomes more mature, our concern is that the rise in unemployment and household savings will limit spending.”
While foreign orders climbed 4.6 percent in September from the previous month, domestic orders decreased 1.9 percent, according to the report.
‘Pointing Upward’
German business confidence surged to a 12-month high in September, the Ifo institute in Munich said on Sept. 24. Confidence among consumers has increased to the highest in 16 months. The ministry said in today’s report that it expects industrial production to expand in the third quarter.
The economy probably grew by about 0.75 percent in the third quarter from the second, when it expanded 0.3 percent, Bundesbank President Axel Weber said on Oct. 3. While “the general economic trend is pointing upward,” the recovery “continues to rely on support from fiscal and monetary policies, and that shouldn’t be withdrawn too quickly,” he said.
German domestic demand was boosted in part by incentives to encourage consumers to buy cars. Bayerische Motoren Werke AG’s German sales rose 3.5 percent in August from a year earlier, the Munich-based automaker said last month. The 5 billion-euro ($7.3 billion) government car package ran out of money earlier than projected last month.
“I think the most important factor for manufacturing orders is the end of the scrappage scheme for cars,” said Anders Matzen, chief economist at Nordea Bank in Copenhagen. “We are probably going to see the domestic orders leveling out, particularly for cars” in September and October.
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