BERLIN German industrial orders rose 1.2 percent in January, almost twice as much as forecast, as both domestic and export markets gave momentum, reinforcing hopes the German economy will shake off the weakness it suffered in 2013.
The increase in orders published by the Economy Ministry on Thursday beat the consensus in a Reuters poll of 33 economists for a seasonally-adjusted monthly rise of 0.7 percent after an upwardly revised drop of 0.2 percent in December.
"Industrial orders started the new year well, despite a small volume of big-ticket orders... The strongest momentum is coming from abroad, from both within and outside the euro zone. Domestic demand is also developing positively, at a slightly more modest pace," the ministry said in a statement.
Germany posted 2013 growth of just 0.4 percent - its weakest expansion since the financial crisis. Recent sentiment surveys have shown consumer and business morale brightening, suggesting the economy will gain momentum in early 2014, but economists are anxious for hard data to back this up given exports, industrial output and orders all fell in December.
"Today's data send two important messages for the German growth outlook. The near term looks very rosy and industrial production should gain further momentum. To maintain this momentum into the longer term, however, the economy needs more domestic demand," said ING economist Carsten Brzeski.
Orders from within Germany rose 0.9 percent on average in December and January compared to the previous two-month period, while foreign orders for German goods rose 2.2 percent. Demand for capital goods and consumer goods was particularly strong.
Europe's largest economy, which is traditionally export orientated, struggled to gain traction last year due to global economic weakness and as domestic demand dragged on growth in the fourth quarter.
Economists expect expansion of around 1.8 percent in 2014, reflecting a gradual pickup worldwide.
Purchasing Managers' Index (PMI) data earlier this week showed solid manufacturing activity and stronger-than-expected growth in services output spurred the private sector to its fastest rate of expansion in almost three years in February.
Separate data released on Thursday showed German exports rose 1.9 percent in the fourth quarter from the previous year, with exports to the euro zone rising 3.3 percent.
(Reporting by Alexandra Hudson; Editing by Stephen Brown)