German orders rise for 3rd month, underpinning recovery hope

By BLOOMBERG

FRANKFURT • German factory orders unexpectedly rose for a third month, underpinning growth momentum after Europe’s largest economy contracted in the third quarter (3Q).

Orders gained 0.3% in October from the previous month, compared to the median estimate in a Bloomberg survey for a 0.4% drop. It’s the longest streak of monthly increases in a year. Orders dropped 2.7% on the year.

The report confirms a Bundesbank prediction that the economy would see a fairly strong rebound in the 4Q as auto makers adapt to new emission testing and ramp up production. It comes at a key moment for the European Central Bank, where policymakers appear determined to cap-bond buying at year-end despite mounting signs of weakening momentum in the euro-area.

Demand for investment goods was bolstered by orders from the euroarea, which surged 9.9%. Total orders from within the 19-nation bloc increased the most since January 2016.

The Economy Ministry said the impact of new emissions-test standards is still noticeable in the car industry, although progress has been made in restarting production. Vehicle orders have revived markedly from a trough in July, according to the statement.

Domestic orders fell the most since April. A report by IHS Markit earlier this week showed manufacturing activity in Germany lost momentum in November as new orders contracted at the fastest pace in four year.