Strong Domestic Demand Boosts German Industrial Orders in December

Strong Domestic Demand Boosts German Industrial Orders in December
A worker wears a protective mask at the Volkswagen assembly line after VW re-starts Europe's largest car factory after coronavirus shutdown in Wolfsburg, Germany, on April 27, 2020. (Swen Pfoertner/Pool via Reuters)

BERLIN—German industrial orders grew more than expected in December, data showed on Friday, with a boost from stronger domestic demand a cause for optimism for the growth outlook of Europe’s largest economy.

Orders for goods grew 2.8 percent on the month in seasonally adjusted terms after a revised increase of 3.6 percent in November, figures from the Federal Statistics Office showed.

A Reuters poll of analysts had pointed to a smaller increase of 0.5 percent on the month.

Domestic orders saw an increase of 11.7 percent on the month. Orders from the rest of the eurozone decreased 4.2 percent in December after an increase the previous month of 13.1 percent.

“Companies are clearly geared up for a recovery and are sitting in the starting blocks for an upswing,” said LBBW analyst Jens-Oliver Niklasch.

“What we need now, above all, is an end to coronavirus restrictions and security in the supply chains. Then we can hope for robust GDP growth this year,” he added.

The economy ministry said the index level pointed to a dynamic economic development once the high order backlog can be worked off, with supply bottlenecks expected to gradually unwind.

“This is a nice growth rate, but it adds to the already high order backlog,” said Alexander Krueger, an analyst with private bank Hauck Aufhaeuser Lampe. “The key remains that orders can be processed to a greater extent in the near future.”

German industrial production unexpectedly fell in November, as supply bottlenecks for raw and preliminary materials have led to order backlogs for German manufacturers.