German industry orders rise for second month in a row

An employee of German car manufacturer Mercedes Benz works on the interior of a GLA model at their production line at the factory in Rastatt

By Joseph Nasr

BERLIN (Reuters) – High demand from abroad boosted German industrial orders in March, data showed on Monday, a second-in-a-row rise analysts saw as a sign the sector is overcoming past volatility and will contribute to growth in coming months.

Contracts for “Made in Germany” goods were up by 1 percent on the month, the Economy Ministry said, the first time since November 2015 that new orders increased for two months in a row.

“Combined with buoyant confidence indicators today’s new orders data suggest that industrial production could finally gather some momentum,” ING Diba economist Carsten Brzeski said in a note to clients.

“There is increasing evidence that contrary to previous cycles industrial production could be the lagging factor of the current positive economic expansion,” he added.

The March figure was on a par with the Reuters consensus forecast and followed an upwardly revised rise of 3.5 percent in February. In January orders fell by 6.8 percent.

A breakdown of the March data showed domestic demand fell by 3.8 percent and foreign orders were up by 4.8 percent, with bookings from euro zone countries rising by 6.8 percent.

The euro zone has been revived by the European Central Bank’s expansive monetary policy, and that recovery is good news for German exporters.

“Demand for exports is becoming buoyant, supported above all by a positive development in the euro zone,” said Sophia Krietenbrink of the DIHK Chambers of Commerce.

Highlighting the importance of the euro zone to Germany, German business associations and economists on Monday welcomed the election of pro-European Union politician Emmanuel Macron as president in France, Germany’s second most important trading partner after China.

“There is a big relief in the engineering industry that the pro-European camp has prevailed in France,” said Carl Martin Welcker, president of the VDMA engineering association.

“With Macron, Germany has won a partner to advance necessary reforms together in the EU.”

The BDI industry association also welcomed Macron’s victory over far-right candidate Marine Le Pen, who had threatened to pull France out of the EU.

Germany wants France and other euro zone economies to implement painful reforms that would make them more competitive. Euro zone peers want Germany to boost investments, which would reduce it big current account surplus.

The German economy is expected to grow 1.5 percent this year. Quarterly growth is expected to nearly double to 0.7 percent in the first quarter from 0.4 percent in the final three months of last year.

Preliminary first quarter growth data is due on Friday.

(Editing by Jeremy Gaunt)