German industrial orders rose in October at their fastest pace for more than two years, data showed on Tuesday, suggesting that the industrial sector will prop up growth in Europe's largest economy in the coming months. Factories saw demand climb 4.9 percent on the month despite bulk orders being lower than usual, the Economy Ministry said. That was the biggest increase since July 2014 and far above the Reuters consensus forecast for a 0.6 percent rise.
"The reading was very strong even without large-scale orders and that suggests it's more than just a flash in the pan," BayernLB economist Stefan Kipar said, noting that some firms might have brought orders forward. Nonetheless, the data revives hopes of an industrial upturn in the fourth quarter after data last week showed engineering orders falling in October by 10 percent from the previous year and manufacturing growth slowing slightly in November.
A breakdown of Tuesday's data showed domestic demand climbed 6.3 percent while foreign orders increased 3.9 percent despite a stagnation in contracts from the euro zone. A 7.2 percent surge in capital goods contracts drove the overall increase while factories making consumer goods and intermediate goods benefitted from stronger demand. Orders for cars and car parts surged.
In the less volatile two-month comparison, bookings increased 2.5 percent. German quarterly growth halved to 0.2 percent in the third quarter as exports weakened, but the economy is expected to perform better in the fourth quarter. The government expects domestic demand to propel growth of 1.8 percent in 2016. The orders data for September was revised up to a fall of 0.3 percent from a previously reported drop of 0.6 percent.