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German Factory Orders Rebound On Strong Eurozone Demand

German Factory Orders Rebound On Strong Eurozone Demand
2/6/2013 8:17 AM ET

Germany's manufacturing orders rose in December due primarily to a marked rise in demand from the euro area, signaling that the impact of the ongoing debt crisis on Europe's largest economy is easing, latest data showed on Wednesday.

New orders placed with German manufacturers increased a seasonally adjusted 0.8 percent monthly in December, after falling 1.8 percent in the previous month, initial estimates from the Federal Ministry of Economics and Technology revealed. The growth rate was broadly in line with the 0.7 percent economists had forecast.

"These new order data add clear evidence that the German industry has reached a turning point," ING Bank Economist Carsten Brzeski said.

The rebound mainly reflected a 7 percent rise in orders from the Eurozone that followed a 0.3 percent drop in November. Euro area demand for capital goods jumped 11.6 percent.

Meanwhile, there was a 0.4 percent month-on-month decline in orders from markets outside the currency bloc, which was significantly slower than November's 6.3 percent fall.

Overall demand in the exports market advanced 2.4 percent, after falling 4.2 percent in the previous month. Total demand in the domestic market dropped 1.2 percent during the final month of last year.

Among the major sub-sectors, orders of intermediate goods and capital goods fell 3.6 percent each from the previous month, while demand for consumer goods moved up 1.7 percent.

Factory orders decreased a working-day adjusted 1.8 percent compared to December 2011, after dropping a downwardly revised 0.9 percent in November. It was forecast to fall at a faster rate of 2.2 percent.

Underscoring the improvement in the German economy in the beginning of 2013, the latest purchasing managers' survey by Markit Economics showed that private sector activity increased at the fastest rate in nineteen months in January, with both the manufacturing sector and the service sector posting notable gains in production.

In another indication that the economy is emerging from the lull induced by the debt crisis, the Ifo index of business confidence rose for a third straight month to a seven-month high in January.

The German economy is estimated to have contracted 0.5 percent in the final quarter of 2012. Both the government and the central bank forecast 0.4 percent GDP expansion for 2013 after 0.7 percent growth in 2012.

In its latest monthly report, the Bundesbank said Germany's economic slowdown is likely to be short-lived, citing the marked improvement seen in the beginning of the year.

by RTT Staff Writer

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