Germany's manufacturing orders unexpectedly increased in March, supported by strong demand from the euro area, raising renewed hopes that the domestic economy is slowly emerging from the ongoing slump and revived the recovery prospects for the currency bloc.
New orders received by German manufacturers increased a seasonally adjusted 2.2 percent sequentially in March, as they did in the previous month, preliminary data from the the Federal Ministry of Economics and Technology showed Tuesday. Economists had forecast orders to fall by 0.5 percent.
Driving the overall growth in new business, orders from the Eurozone market jumped 4.2 percent. Total overseas orders rose 2.7 percent, while new business in the domestic market moved up by 1.8 percent.
Among industrial sub-groups, new works in the intermediate and capital goods industries increased 3.6 percent and 2 percent respectively from the prior month. Meanwhile, orders of consumer goods dropped by 0.7 percent.
Factory orders decreased an unadjusted 0.4 percent compared to March 2012, after dropping 0.2 percent in February this year. Economists had forecast a 2.9 percent fall.
In the two months ended March, orders placed with German goods producers advanced 2.6 percent from the preceding two-month period, with export market and domestic market recording gains of 2 percent and 3 percent, respectively.
The German industry is likely overcoming its weakness gradually, with the strong growth in orders turning the entire quarter slightly to positive territory, the Ministry said.
In contrast to the positive order data, the purchasing managers' survey for April showed that the German manufacturing sector contracted at the fastest pace since December 2012, though at a weaker rate than initially estimated. New orders dropped for the second straight month, and at the fastest pace so far this year.
The construction sector, meanwhile, contracted at a notably slower pace in April than in the previous month when activity was disrupted by the unusually bad weather.
In April, a survey by the Ifo Institute showed that German business confidence deteriorated sharply in April due to increasing caution among companies, casting doubt about the ability of the economy to recover strongly in the coming months.
The Economy Ministry last month raised its outlook for 2013 marginally. The German economy is forecast to grow 0.5 percent this year, up from the previous forecast of 0.4 percent. Further, growth is seen improving to 1.6 percent next year.
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