People paddle in the morning hours as the sun goes up in Hamburg on January 29, 2024. Photo by MORRIS MAC MATZEN / AFP
Frankfurt, Germany: German factory orders unexpectedly surged in December, official data showed Tuesday, boosting hopes that a manufacturing slowdown in Europe's largest economy was bottoming out.
New orders, closely watched as an indicator of future business activity, jumped 8.9 percent month-on-month, federal statistics office Destatis said, after stagnating in November.
Analysts surveyed by FactSet had expected a slight drop.
Destatis said the surprise rebound was driven by a few big-ticket items, with the "other vehicle construction" sector which includes planes and trains seeing a 110-percent jump in orders.
Electrical equipment manufacturing also saw strong order growth, as did metal products and pharmaceuticals.
Orders for motor vehicles and chemical products declined, however.
In the less volatile three-month comparison, industrial orders were up just 0.1 percent, Destatis said.
Over the whole of 2023, orders were 5.9 percent lower than the year before.
Nevertheless, the December uptick "gives hope that the downward trend in German industry is finally bottoming out", said ING bank economist Carsten Brzeski.
"Many more of these positive data releases" will be needed, however, "to signal any significant rebound of the economy", he added.
High inflation, costly energy and weaker demand from key market China have all weighed heavily on Germany's crucial manufacturing sector in recent months.
The industrial slowdown contributed to a wider downturn in the German economy, which shrank by 0.3 percent in 2023.
The Bundesbank central bank expects a modest recovery to get under way in 2024, predicting growth of 0.4 percent as inflation eases and demand picks up.
