Bloomberg News

German Manufacturing Orders Surge in Sign of Resilience

December 06, 2012

German Factory Orders Surge Almost Four Times More Than Forecast

Beiersdorf AG today raised its full-year sales forecast for the second time in little more than a month as the maker of Nivea skin cream said revenue at its consumer business would grow more quickly than anticipated. Photographer: Michele Tantussi/Bloomberg

German factory orders surged almost four times as much as economists forecast in October, driven by foreign demand.

Orders, adjusted for seasonal swings and inflation, jumped 3.9 percent from September, the Economy Ministry in Berlin said today. It revised September’s drop to 2.4 percent from 3.3 percent. The increase in October is the biggest since January 2011 and exceeds the median forecast for a 1 percent gain in a Bloomberg News survey of 42 economists. From a year earlier, orders fell 2.4 percent when adjusted for work days.

German business confidence unexpectedly rose in November after growth slowed less than economists predicted in the third quarter. At the same time, the euro area, Germany’s largest export market, slipped into recession. The Bundesbank has warned that the economic slowdown could continue in the fourth quarter as the region’s debt crisis and weaker global growth damp demand.

“The music is playing outside the euro region, where the label ‘Made in Germany’ is enjoying everlasting popularity,” said Mario Gruppe, an economist at NordLB in Hanover. “That’s good news for the economic outlook. We’re in for a cold winter but not a recession - everything speaks for an economic dent.”

The euro rose after the report and was trading unchanged at $1.3068 at 12:40 p.m. in Frankfurt. The benchmark DAX index rose 1 percent today to 7526.30.

Export Orders

Export sales soared 6.7 percent in October, driven by an 8.5 percent increase in orders from outside the euro area, today’s report shows. Orders from the 17-nation currency bloc rose 3.5 percent and domestic orders were up 0.4 percent.

Orders for intermediate goods rose 3.4 percent, investment- goods orders climbed 4.5 percent and consumer goods orders were up 2.1 percent. The number of bulk orders was below average, the ministry said.

The “considerable” October increase, the first in three months, “markedly tempers the negative trend in industrial demand,” the ministry said. Still, “the economic environment remains weak and industrial production should remain muted in the coming months.”

While at least five of the economies sharing the euro are battling recessions, Germany’s expanded 0.2 percent in the third quarter.

Moderate Pick-Up

“Since there’s so much austerity going on in the euro area and the U.S., we won’t have a booming economy,” said Aline Schuiling, senior economist at ABN Amro Bank NV in Amsterdam. “But there’s increasing evidence for the fact that the global industrial cycle has bottomed out. For Germany, that means we will see a moderate pick-up. Moderate, but still a pick-up.”

The Organization for Economic Cooperation and Development predicts German growth of 0.9 percent this year, 0.6 percent in 2013 and 1.9 percent in 2014. That compares with projected contractions of 0.4 percent and 0.1 percent this year and next for the euro area as a whole, followed by growth of 1.3 percent in 2014.

“The economy is currently influenced by a streaky overall picture that is likely to continue to darken by the end of the year,” the Bundesbank said in its monthly report published Nov. 19. “The uncertainties stemming from the sovereign-debt crisis are as much a concern as the mixed economic signals from other regions of the world.”

The Frankfurt-based institution will publish fresh forecasts tomorrow.

Asia, U.S.

New Zealand’s central bank kept its benchmark interest rate unchanged at 2.5 percent today. South Korea’s economy grew less than initially estimated in the third quarter, according to Bank of Korea data, while Australia reported today its unemployment rate unexpectedly dropped in November.

The U.S. Labor Department may say fewer Americans filed first-time claims for unemployment insurance payments last week, a survey shows.

Germany’s Schaeffler AG, the roller-bearing maker that’s the biggest investor in car-parts manufacturer Continental AG (CON), lowered its 2012 sales forecast on Nov. 20 because of weaker demand in Europe and Asia.

Still, Beiersdorf AG (BEI) today raised its full-year sales forecast for the second time in little more than a month as the maker of Nivea skin cream said revenue at its consumer business would grow more quickly than anticipated. Sales will rise “well over” 4 percent this year, the Hamburg-based company said.

“The German economy is set to stagnate in the winter months,” said Andreas Moeller, an analyst at WGZ Bank in Dusseldorf. “However, it’s doing better than other euro countries and growth should pick up in the spring.”

To contact the reporter on this story: Jana Randow in Frankfurt at jrandow@bloomberg.net

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


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