By Todd Buell
FRANKFURT--German manufacturing orders fell in September, but some analysts still expect that underlying strength will allow industry to contribute to growth in Europe's largest economy at the end of the year. Still uncertainty about global developments risk slowing a pick up in German industry.
Orders fell 0.6% on the month in adjusted terms versus an expected gain of 0.1% in a Wall Street Journal poll of economists. The decline followed a gain of 0.9% in the previous month and 0.2% in July.
September's data showed declines in both domestic and foreign orders with domestic orders down 1.1% and foreign orders down 0.3%.
The Economy ministry said orders grew by 0.5% in the third quarter versus the previous three months with momentum coming from abroad. "The brightening of relevant sentiment indicators suggests a certain recovery of industrial production for the rest of the year," said the ministry.
The closely watched Ifo index of firms has increased over the last two months, while a recent purchasing managers' survey signaled strong improvements in German manufacturing conditions.
Economists flagged still underlying momentum as a sign of strength in Germany's manufacturing sector. "It is likely that manufacturing will again make a small contribution to German economic growth in [the fourth quarter]," said Ralph Solveen an economist with Commerzbank. BayernLB economist Stefan Kipar said that the level of orders of German firms "remains all in all satisfactory."
Some analysts, however, express more concern about the future.
"German industry is still running low on fuel. New orders have actually been stagnating for almost two years now," said ING economist Carsten Brzeski in a comment following the publication of September's data. "It is hard to see how the German industry can shift to higher gear."
Developments both in the United States and China are vital, he said in a follow-up interview. "A lot of Germany's economic destiny is in the hands of U.S. voters tomorrow," while China's growth outlook remained "unclear." In addition, uncertainty from the ramifications of the United Kingdom's vote to leave the European Union "will not disappear," he said.
contributed to this article.
(END) Dow Jones Newswires
November 07, 2016 04:48 ET (09:48 GMT)
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