Weak EUR boosts German factory orders

Discussion in 'Economics' started by ASusilovic, Jun 7, 2010.

  1. June 7 (Bloomberg) -- German factory orders unexpectedly jumped for a second month in April as the weaker euro boosted export demand and companies increased investment.

    Orders, adjusted for seasonal swings and inflation, rose 2.8 percent from March, when they surged 5.1 percent, the Economy Ministry in Berlin said today. Economists had forecast a 0.4 percent drop, according to the median of 34 estimates in a Bloomberg News survey. From a year earlier, orders gained 29.6 percent.

    Europe’s sovereign debt crisis has pushed the euro down 20 percent against the dollar since late November, making exports to countries outside the 16-nation currency bloc more competitive. While budget cuts across the region may crimp economic growth, German factories are ramping up production to meet booming foreign orders and a rebound in domestic investment.

    “Germany’s recovery is solid for now,” said Jens-Oliver Niklasch, a fixed income strategist at Landesbank Baden- Wuerttemberg in Stuttgart. “However, companies will eventually be hit by the turmoil once it filters through to the real economy.”

    The Economy Ministry revised up the orders increase in March from an initially reported 5 percent. In April, domestic orders climbed 2.9 percent and export sales rose 2.8 percent, driven by a 5.5 percent gain in orders from outside the euro area, today’s report showed.

    Export Demand

    Demand for goods such as Siemens AG turbines and Daimler AG cars in emerging economies like China is encouraging companies to add workers. The unemployment rate unexpectedly fell to 7.7 percent in May.

    Daimler’s Mercedes-Benz, the world’s second-biggest luxury- vehicle brand, aims to increase second-quarter sales “substantially” as the high-end E-Class sedan attracted customers in April. Deliveries rose 15 percent from a year earlier to 93,100 cars and sport-utility vehicles, the carmaker said on May 11


    I think some ANALysts have to recaclculate their profit forecasts...:cool: