German Factory Orders Rise as Economy Grapples With Longer Curbs

German factory orders rose in January, suggesting manufacturing will continue to support the economy through extended coronavirus lockdowns.

Demand increased 1.4%, nearly three times as much as expected and bolstered by orders from outside the country. Domestic demand declined.

German Factory Orders Rise as Economy Grapples With Longer Curbs

Chancellor Angela Merkel set out a plan this week to gradually unwind restrictions on the economy, allowing some stores to open on Monday. Further easing steps can follow every two weeks depending on local contagion rates.

It still means many containment measures will remain in place at least through the end of the month, and Bloomberg Economics expects the German economy to shrink as much as 3% in the first quarter. While the manufacturing sector has held up better than services, factory orders dropped in December, damped in part by weak demand from the euro area.

Most economists expect the recovery to take off in the second half of the year as vaccinations progress and restrictions are lifted for good. The European Central Bank will present new forecasts for the 19-nation euro zone next week.

Still, Germany will have to increase debt spending this year to help tackle the impact of the crisis, according to Finance Minister Olaf Scholz.

©2021 Bloomberg L.P.

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