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.

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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