German industrial orders soar above expectations: ministry
Industrial orders in Germany rose sharply in October, official data showed today, raising hopes that Europe's top economy is standing up to the ongoing turmoil in the euro zone.
In a result that one analyst called "extraordinary", orders were up by 5.2% on the month in October, following a decline of 4.6% in September, according to the economy ministry. This smashed the expectations of analysts, who forecast a gain of 0.8%.
It also stood in contrast to a warning from S&P rating agency that Germany was at risk of losing its top AAA credit rating if EU leaders do not put a stop to the euro zone debt crisis.
S&P said that 15 of the 17 eurozone countries were at risk of a downgrade if an EU summit at the end of this week did not agree convincing action.
However, in a sign that the crisis might be having an impact on firms' order books in Germany, the ministry said that the gain was mainly driven from abroad, where orders rose by 8.3% on the month.
Domestic orders rose by a less impressive 1.4%. "After three declines in a row, industrial orders have made a good start to the final quarter of the year," the ministry said.
"The demand trend however remains subdued. Industrial production should therefore continue its currently settled development," the ministry added.
The poor figures from last month took their toll, however, on the less volatile two-monthly data, with orders in September and October down by 2.7% compared to July and August.
Despite the crisis seething around it, Germany's economy has remained broadly on track, although analysts warn it cannot remain immune to the turmoil forever. Last week, unemployment in Germany fell to a 20-year low point and retail sales surprised to the upside, showing that consumers have not given up their optimism - a trend also suggested by confidence surveys.
However, there have also been warning signs for Europe's biggest economy, not least from ratings agency Standard and Poor's who warned last night that Germany's coveted AAA credit rating was at risk.
A disappointing bond auction in Germany last month had also fuelled fears that the euro zone debt crisis was seeping from the edges of the bloc to the core. Markets were concerned that if European powerhouse Germany was having difficulty selling its bonds, then there was little hope for the likes of Italy and Spain.
