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German turnaround confirmed as industrial orders rise

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(Globalpost/GlobalPost)

Germany appears to have put the worst of the crisis behind it, analysts said on Wednesday, with industrial orders on the rise, lending weight to the recent sharp gains in confidence indicators.

Industrial orders increased by 0.8 percent in December compared with November, after falling by 1.8 percent the previous month, the economy ministry said in a statement.

Analysts polled by Dow Jones Newswires had been pencilling in a gain of 0.7 percent for December.

"There was an above-average volume of big-ticket orders," the ministry explained.

And while domestic orders declined by 1.2 percent, orders from abroad rose sharply by 2.4 percent, it calculated.

By sector, incoming orders for semi-finished goods fell by 3.6 percent month-on-month in December, while orders for capital goods and consumer goods increased by 3.6 percent and 1.7 percent respectively.

Using a two-month comparison to iron out short-term fluctuations, orders rose by 0.5 percent in November and December combined compared with the preceding two months.

"At the end of last year, industrial orders picked up again, which bodes well for the overall trend in orders for the current year," the ministry said.

"Together with the improvement in business confidence, early indicators point to a end to the current phase of industrial weakness in the foreseeable future," the ministry said.

Analysts shared the ministry's confidence, especially as it appears to back up the recent strong rise in industrial sentiment indicators.

"All in all, German factory orders are back on to a positive trend in the fourth quarter of last year, which should continue in 2013," said Thomas Harjes at Barclays Research.

"This bodes well for our forecast of a swift recovery of economic activity currently underway in Germany, also reflecting a robust expansion again of industrial activity," the analyst said.

Commerzbank analyst Ralph Solveen said that the underlying upward trend in orders since last autumn "supports our expectation that the German economy has achieved a turn for the better. After a weak fourth quarter of 2012, we therefore assume it already returned to noticeable growth in the first months of this year," he said.

ING Belgium economist Carsten Brzeski said the latest orders order "add clear evidence that the German industry has reached a turning point."

The data provided the "best conditions for industrial production to pick up in the coming months. It looks as if the new optimism of German businesses is based on facts and orders and not on hot air," Brzeski said.

Last month, the widely watched Ifo business climate index rose to its highest reading since June and investor confidence is also on the rise, too.

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http://www.globalpost.com/dispatch/news/afp/130206/german-turnaround-confirmed-industrial-orders-rise