German industry orders surge in June

Berlin: German manufacturing orders rose by 3.2 per cent on the month in June due to strong foreign demand, surpassing expectations and sending the euro higher.

The rise, which compared with a consensus forecast for a gain of 1.5 per cent, was aided by big orders for planes and trains. Without these exceptional items, economists said orders would have fallen slightly.

June's orders increase rounded out a strengthening in demand over the second quarter, when orders rose by 7.7 per cent from the first three months of the year, the Economy Ministry said yesterday. Economists expected the rise in demand to slow.

"The momentum is very strong," said Dirk Schumacher at Goldman Sachs. "The tempo is so fast however that it clearly can't continue. The economy will cool slightly, although we don't expect it to stagnate."

European Central Bank President Jean-Claude Trichet, speaking after the ECB left rates unchanged, said the second and third quarters would likely be stronger than expected in the euro zone but that the second semester would be less buoyant.

Trichet said he had no particular message of foreign exchange rates. After the release of the German orders data, the euro hit a session high against the dollar. Germany's DAX blue-chip share index also hit a 2-year high.

Yesterday's figures showed a 0.3 per cent rise in domestic orders and a 5.7 per cent increase in those from abroad. May's decline in orders was revised to a 0.1 per cent dip from a fall of 0.5 per cent previously reported.

Export boom

The rise in orders added to evidence that an export-driven recovery is helping Germany to grow faster than expected, leaving behind poorer euro zone countries hit by a sovereign debt crisis that they are still battling to overcome.

"German manufacturing is downright booming," said DekaBank economist Andreas Scheuerle. "It is the second best quarterly result in orders in unified Germany's history, the only bigger plus was just after the crisis."

A purchasing managers' survey released on Wednesday showed strong growth in the services sector in Germany but weakness in southern Europe.