German factory orders surge on investment goods demand

Warsaw - German factory orders surged in October, suggesting growth in Europe’s largest economy will accelerate at the end of the year.

Orders, adjusted for seasonal swings and inflation, jumped 4.9% from September, when they fell a revised 0.3%, data from the Economy Ministry in Berlin showed on Tuesday.

The increase was the biggest since July 2014, and compared with a median estimate of 0.6% in a Bloomberg survey. Orders gained 6.3% from a year earlier.

The report adds to signs that Germany’s economy is gathering pace after a slowdown in the third quarter. Business sentiment held at the highest level in more than two years in November, while unemployment remained at a record low.

The Bundesbank predicts growth will accelerate “considerably” in the final three months of the year.

“We’re looking at a nice positive outlier that built on stronger growth in the US and more demand in emerging markets,” said Carsten Brzeski, chief economist at ING-Diba n Frankfurt. “While data may point to a pickup in momentum in the fourth quarter, I’d still be cautious. Industrial output is not the growth driver that it used to be.”

The euro dropped after the report and traded at $1.0745 at 8:21.

The Economy Ministry will publish production data for October on Wednesday. Economists predict an increase of 0.8%, according to a separate survey.

Orders for investment goods climbed 7.2% in October, Tuesday’s report showed. Demand for basic goods gained 1.8% and that for consumer goods increased 0.5%. Domestic demand was up 6.3% and export orders rose 3.9%.

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