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German industrial orders rose at a 'remarkable pace' in August

BERLIN (Reuters) - Orders for German-made goods rose 4.5% in August, more than expected, boosting hopes for a robust third-quarter in Europe’s largest economy after the coronavirus shock.

The increases were driven by demand from the euro zone, the Federal Statistics Office said on Tuesday, suggesting companies are making good progress back to pre-crisis levels. A Reuters forecast had predicted a 2.6% gain on the previous month.

“The catch-up process for new industry orders is continuing at a remarkable pace,” the economy ministry said in a statement.

Order intake was now only 3.6% lower than in February, before lockdown measures were imposed to slow the spread of the coronavirus, the office said.

Economists applauded the strong data, but cautioned that rising infection rates across Europe were increasing the risk of setbacks.

“It is difficult to imagine how German manufacturing could escape another round of lockdown measures with important trading partners,” said ING Bank economist Carsten Brzeski.

“Nevertheless, today’s industrial order data suggest that full order books - at least in the near future - could help the manufacturing sector to overtake the service sector.”

Official figures released last week showed German retail sales rose much more than expected in August and unemployment fell further in September, boosting hopes that household spending would power a recovery.

Figures from the statistics office showed that orders from abroad increased by 6.5%, boosted by a 14.6% surge in orders from the rest of the euro zone. Domestic orders rose by 1.7% on the month.

The German economy contracted by 9.7% in the second quarter as household spending, company investments and trade collapsed at the height of the pandemic.

An easing of lockdown measures, coupled with an unprecedented array of rescue and stimulus packages, has led to a robust recovery in the third quarter, but a spike in new COVID-19 cases has caused concern that activity could slow again.

Economy Minister Peter Altmaier warned on Monday that Germany must avoid another shutdown of industrial activity.

The Ifo institute expects 6.6% output growth in the third quarter, then a slowing to 2.8% in the fourth quarter.

Reporting by Caroline Copley; editing by Riham Alkousaa, Larry King

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