Bloomberg News

German Factory Orders Surge on Rebound in Export Demand: Economy

December 06, 2011

Dec. 6 (Bloomberg) -- German factory orders surged the most in 19 months in October after three straight declines, led by a rebound in demand from abroad.

Orders, adjusted for seasonal swings and inflation, jumped 5.2 percent from September, when they dropped 4.6 percent, the Economy Ministry in Berlin said in a statement today. Economists forecast a gain of 1 percent, according to the median of 34 estimates in a Bloomberg News survey. In the year, orders rose 5.4 percent when adjusted for work days.

Germany faces a possible recession as the sovereign debt crisis and a global slowdown sap demand for exports, while Standard & Poor’s warned yesterday that the nation faces the risk of a credit rating downgrade. Business confidence still rose for the first time in five months in November and unemployment declined more than forecast, suggesting domestic demand may help Europe’s largest economy weather the downturn.

“Our outlook for the economy is clouded and we would stick to that, but it’s good to see that the fourth quarter may not be quite as weak as many had expected,” said Christian Lips, an economist at NordLB in Hanover, Germany. “Germany is at the edge of a recession, but maybe we’ll just manage to get around it.”

The euro was little changed after the report and traded at $1.3414 at 1:14 p.m. in Frankfurt, up 0.1 percent on the day.

With turmoil from Europe overshadowing the global economy, Australia executed its first back-to-back interest-rate cut since 2009 today. The Asian Development Bank cited escalating risks to its growth outlook, saying there’s a possibility of recession in the U.S. and Europe.

GDP Reports

In Brazil, the economy expanded 2.1 percent in the third quarter from a year ago, the national statistics agency said today in Rio de Janeiro. Economists forecast growth of 2.4 percent, according to a Bloomberg survey.

By contrast, growth in South Korea, Asia’s fourth-largest economy, accelerated to 3.5 percent in the third quarter from 3.4 percent. The euro region economy expanded 0.2 percent in the third quarter from the previous three months and 1.4 percent from a year earlier, data confirmed today.

In Germany, domestic factory orders rose 1.4 percent in October, the Economy Ministry said. Foreign orders soared 8.3 percent, reversing September’s 5.8 percent drop, led by an 8.9 percent advance in sales to other euro-area countries. Orders for investment goods jumped 7.8 percent while consumer goods orders increased 1.3 percent.

‘Good Start’

German chemicals maker BASF SE on Nov. 29 raised its sales target for the end of this decade on emerging-market growth. Roller-bearing maker Schaeffler AG on Nov. 22 said global orders are “solid” even amid signs of slowdown in Europe.

“Factory orders made a good start to the final quarter of the year,” the Economy Ministry said in a statement. “Their level appreciably exceeded that of the third quarter. But the trend in demand remains restrained.”

The Bundesbank on Nov. 21 cut its 2012 growth forecast to between 0.5 percent and 1 percent from a June prediction of 1.8 percent, and said a “pronounced” period of economic weakness can’t be ruled out if the debt crisis worsens.

ThyssenKrupp AG, Germany’s largest steelmaker, on Dec. 2 posted a fiscal full-year loss and said it’s “impossible at present to reliably predict” how the new fiscal year will unfold due in part to uncertainty over the impact of the crisis.

The European Central Bank unexpectedly pared interest rates on Nov. 3, saying a “mild recession” is on the cards in the 17-nation euro economy. Policy makers gathering in Frankfurt on Dec. 8 will probably cut borrowing costs by a further 25 basis points, taking the key rate to 1 percent, according to all but five of 58 economists in a Bloomberg survey.

--With assistance from Sheenagh Matthews and Alex Webb in Frankfurt and Craig Stirling in London. Editors: Matthew Brockett, Simone Meier

To contact the reporter on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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