Forget the euro zone, German industry orders jump
BERLIN, May 7 — German industrial orders shot up in March with foreign demand coming almost exclusively from non-euro zone countries, highlighting Germany’s resilience to the debt crisis but also its increased reliance on markets outside the bloc.
Seasonally and price-adjusted orders rose 2.2 per cent on the month compared with a revised 0.6 per cent in February, Economy Ministry data showed today. This was well above a Reuters poll of 42 economists for a modest rise of 0.5 per cent.
The orders were boosted by demand from outside the single-currency bloc, which rose by 4.8 per cent. However, orders from key trading partners in the euro zone, which accounts for 40 per cent of exports, stagnated on the month.
“Today’s German new order data nicely illustrate the euro zone’s dilemma,” said Carsten Brzeski at ING Bank.
“While everyone is talking about growth or the lack of growth, demand for “Made in Germany” is still stable. However, it is demand from Germany and outside the euro zone, not from other euro zone countries,” he said.
Germany’s export driven economy, which bounced back from the 2008/09 financial crisis, contracted slightly at the end of last year on the back of flagging demand.
This is now thought to have been a blip and Germany’s eight leading economic institutes have revised their growth forecasts for this year upwards slightly to 0.9 per cent. The government has stuck to its 2012 forecast of 0.7 per cent.
But renewed worries about the finances of large euro zone economies and austerity measures pushing up unemployment and hampering growth in peripheral countries have choked off demand for Germany‘s high-end exports from key trading partners in Europe.
So German companies are increasingly looking to markets outside the euro zone to boost export demand during uncertain times.
For example, German luxury car makers BMW and Porsche reported record first quarter profits last week as Chinese demand for sporty sedans and SUVs surged, underlining their growing dependence on Asian customers.
“It is doubtful the German engine will be able to continue running on non-euro zone fuel for a long while,” Brzeski said.
Germany’s domestic orders rose by 1.3 per cent month-on-month, bouncing back from a fall of 0.8 per cent in February, in line with upbeat sentiment surveys and lifting hopes that private consumption will help the economy through any weak phase.
German business sentiment has resisted a string of disappointing data to rise for the sixth month in a row in April, defying forecasts for it to fall.
Consumer confidence inched down heading into May, but some companies in the auto market have reported a slight pick up in domestic demand.
The German new car market rose 3 per cent in April thanks partly to household consumers slowly returning to dealership showrooms, defying weakness in other major European economies like Italy. – Reuters