German factory orders rose for a third month in a promising sign for the manufacturing sector, which has been faring less favorably than services in Europe’s largest economy.
(Bloomberg) — German factory orders rose for a third month in a promising sign for the manufacturing sector, which has been faring less favorably than services in Europe’s largest economy.
Demand rose 4.8% in February from the previous month — the biggest increase since June 2021 and better than the 0.3% median estimate in a Bloomberg poll of economists. It was driven by large-scale orders for vehicles, the statistics office said in a statement. Domestic demand also increased significantly.
While bottlenecks that emerged during the pandemic have been fading, manufacturers have suffered from sluggish demand due to low confidence and diminishing purchasing power. Business surveys by S&P Global this week pointed to a deepening downturn in March, though some companies used the better availability of parts to work through a backlog of orders.
Germany, where manufacturing plays an outsized role in the economy, is at risk of a shallow recession after output shrank 0.4% in the last three months of 2022. The full impact of interest-rate hikes by the European Central Bank is also still filtering through.
There are grounds for optimism, however, including an expectations gauge by the Ifo institute that rose to the highest in a year late last month. Carmakers were among firms reporting improving business.
–With assistance from Barbara Sladkowska.
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