German industrial orders rebounded in April after a sharp fall the previous month thanks to a surge in contracts for consumer goods, data showed today, suggesting output in Europe’s largest economy will pick up in the coming months.

Data from the Federal Statistics Office showed orders climbed by 3.1 per cent on the month in April after dropping by 2.8 per cent in March. That beat the Reuters consensus forecast for a 1.3 per cent increase and overshot even the highest estimate for a gain of 2.5 per cent.

“Today’s data shows that at least the industry is alive and kicking,” said Carsten Brzeski, economist at ING. “German new orders just provided a first piece of evidence that the weakening of the economy at the end of the first quarter should have been a one-off, rather than a new trend.”

The German economy expanded at its fastest rate in three years in the first quarter, helped by an unusually mild winter, but data for March showed orders, output and exports dropping. Many economists expect growth to slow in the second quarter. But Thursday’s data provided hope that output in Germany’s mighty industrial sector would increase, especially given that capital orders increased, suggesting that companies intend to produce more goods in the future.

The economy ministry said the data showed that industrial orders got off to a good start in the second quarter and that there was a strong chance they would grow in the quarter overall. Consumer goods firms saw bookings rise by 7.1 per cent while manufacturers of intermediate goods had a 0.2 per cent increase in orders.

Demand from abroad was strong despite the Ukraine crisis, with contracts from foreign countries up 5.5 per cent. Domestic bookings were, however, unchanged. Other recent data has been less upbeat, with a survey published this week showing the manufacturing sector expanded at its weakest pace in 7 months in May. Unemployment has also increased while business and investor morale has weakened.

Reuters