German industrial orders bounced back in August, rising more than expected on strong foreign demand, data showed today.

This suggested that factories will contribute to overall growth in Europe's largest economy in coming months. 

Factories registered a 3.6% increase in orders after contracts for 'Made in Germany' goods fell by an upwardly revised 0.4% in July, data from the Economy Ministry showed.

The reading for August was the strongest monthly increase since December. It easily beat the Reuters forecast for a 0.7% rise, surpassing even the most optimistic estimate.

A data breakdown showed domestic demand rose 2.7% while foreign orders jumped 4.3%, propelled by a 7.7% increase from customers outside the euro zone - despite the recent appreciation of the single currency. 

"Orders activity further picked up recently from an already high level," the ministry said, adding that the positive trend was backed by good business morale and strong output figures. 

"The solid upturn in the manufacturing sector should therefore continue," it added.