German Factory Orders Surge, Ending String of Declines This Year

(Bloomberg) -- German factory orders surged in May, ending a string of declines and suggesting a much-awaited pick-up in growth momentum in Europe’s largest economy.

The 2.6 percent gain was more than twice as strong as the 1.1 percent median forecast of economists in a Bloomberg survey. It’s also the first increase this year, though it should be noted that it can be a volatile series.

German Factory Orders Surge, Ending String of Declines This Year

The report may underpin the Bundesbank’s confidence that the economy’s weak start to the year will prove temporary. There’s been a mixed batch of indicators recently, with industrial production dropping at the start of the second quarter and manufacturing activity cooling in June.

However, this week a gauge of private-sector activity jumped to a three-month high, led by an improvement in services. There continue to be encouraging signs from Germany’s labor market, where unemployment is at a record low, which should help consumer spending.

The Bundesbank predicts the German economy will grow 2 percent this year and 1.9 percent in 2019, after 2.2 percent in 2017.

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