June 6, 2019 / 6:46 AM / 11 days ago

Relief for German industry as orders rise on foreign demand

FILE PHOTO: Aerial view of containers at a loading terminal in the port of Hamburg, Germany August 1, 2018. REUTERS/Fabian Bimmer/

BERLIN (Reuters) - German industrial orders rose more than expected in April, driven by strong foreign demand that pointed to resilience in Europe’s largest economy despite headwinds from trade disputes and uncertainty about Brexit.

Industrial output increased by 0.3% on the month, data released by the Statistics Office showed on Thursday. A Reuters forecast had pointed to a rise of 0.1%. The March reading was revised up to 0.8% from 0.6%.

The positive readout on Germany’s industrial sector followed a raft of weak readings from the economy, which saw unemployment rise for the first time in nearly two years in May and business morale deteriorate more than expected.

“This is some welcome relief for German industry,” said ING economist Carsten Brzeski.

In April, the government cut its growth forecast for this year to 0.5% after an expansion of 1.4% in 2018 as growth is slowed by U.S. President Donald Trump’s ‘America First’ trade policies and the risk of a disorderly Brexit.

Germany’s spluttering economy returned to growth in the first quarter, expanding by 0.4% on the quarter as consumers spent more freely and construction activity picked up.

Domestic demand has become the main pillar of economic support as the trade and Brexit risks slow Germany’s traditional export engine. However, Thursday’s orders data showed domestic orders fell by 0.8% on the month. Foreign orders rose by 1.1%.

“All of this means that while today’s industrial order data is definitely good news and gives reason for moderate optimism, it will still take a while before industry returns as a powerful growth engine for the entire German economy,” said Brzeski.

Writing by Paul Carrel, editing by Michael Nienaber and Toby Chopra

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