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German orders disappoint, but growth forecast up

Friday - 12/6/2013, 8:19am  ET

BERLIN (AP) -- German industrial orders dropped unexpectedly sharply in October, according to data released Friday, but the central bank raised its growth forecast for the country's economy on healthy domestic demand fueled by low unemployment.

Orders dropped 2.2 percent compared with the previous month, the Economy Ministry said. That followed a downwardly revised 3.1 percent increase in September and continued a pattern of volatile and choppy demand this year.

The October performance was worse than the decline of 1 percent or less that economists had forecast, and the ministry said the number of bulk orders was below average after spiking in September. Demand declined across the board -- orders from inside Germany were off 2 percent, those from elsewhere in the eurozone slid 1.3 percent and there was a 2.9 percent drop in demand from other countries.

Carsten Brzeski, an economist at ING, noted, however, that new orders have risen by roughly 5 percent since the beginning of the year. "The underlying trend is slightly positive," he said.

Germany's central bank, the Bundesbank, also sounded a positive note, lifting its growth forecast for the economy this year and next.

The bank predicted that the economy, Europe's biggest, will grow by 0.5 percent this year and 1.7 percent in 2014. That is up from its forecast in June for 0.3 percent expansion this year and 1.5 percent next year.

The economy will expand by 2 percent in 2015, the Bundesbank forecast. Germany's performance over recent quarters, though unspectacular, has been much better than that of many other European countries.

Bundesbank President Jens Weidmann said that low unemployment and low interest rates, among other factors, are supporting private consumption, and exports and imports should be bolstered by growth in other industrial countries.


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