German factory orders rise strongly in October in promising sign for 4th quarter

BERLIN – German factory orders rose strongly in October in a development that’s likely to ease concerns over the state of Europe’s largest economy, though the country’s central bank cautioned Friday that it expects only modest growth over the winter.

October orders were up 2.5 per cent over September, the Federal Statistical Office said. Domestic orders provided the main impetus behind the rise, spiking 5.3 per cent. Foreign orders swelled only 0.6 per cent.

The agency also upwardly revised the previous month to show a 1.1 per cent rise.

Germany’s economy contracted slightly in the second quarter but avoided recession with meagre 0.1 per cent growth in the third quarter.

UniCredit economist Andreas Rees says it is “too early to push the all-clear button” for the industrial sector, but that the factory order figures — which beat economists’ forecast of a 0.5 per cent rise — were a “promising start.”

Germany’s central bank, the Bundesbank, said it expects economic growth of 0.1 per cent in the current quarter compared with the late summer, and only a slight acceleration to 0.2 per cent in the first quarter.

“There is, however, a well-founded hope that the current phase of weakness will prove to be temporary,” Bundesbank President Jens Weidmann said in a statement.

The central bank cut its forecast for full-year growth in 2014 to 1.4 per cent from the 1.9 per cent it predicted in June, an outlook that is still more optimistic than the 1.2 per cent seen by the government.

It halved its 2015 outlook to 1 per cent and said that growth could accelerate to 1.6 per cent in 2016, rather than 1.8 per cent as previously forecast.