German industrial orders rise more than expected in March

By Maria Martinez

(Reuters) -German industrial orders rose more than expected in March, posting their first increase this year and potentially pointing to an improvement in the sluggish sector if trade tensions ease.

Orders increased in March by 3.6% on the previous month on a seasonally and calendar adjusted basis, the federal statistics office said on Wednesday. A Reuters poll of analysts had pointed to a rise of 1.3%.

"This could be the start of a slight upward trend, which the leading indicators have already been signaling," said Marco Wagner, senior economist at Commerzbank.

The HCOB Germany Manufacturing PMI compiled by S&P Global rose to 48.4 in April, its highest level since August 2022.

However, the upward trend in German manufacturing is likely to be moderate, Wagner said, noting that structural problems are compounded by rising U.S. tariffs, which will make it even more difficult for German companies to do business in their most important foreign market.

President Donald Trump's tariff offensive is testing relations between the two allies, threatening their two-way trade and risking major damage to a limping German economy.

The tone from the White House has recently sounded somewhat more conciliatory, said Thomas Gitzel, chief economist at VP Bank.

"If an amicable solution can be found with the U.S., the manufacturing industry could gain further momentum in the coming months," Gitzel said.

For Cyrus de la Rubia, chief economist at Hamburg Commercial Bank AG, it is hard to believe that this is the turning point, as major jumps in incoming orders are by no means unusual and volatility is relatively high.

"It is also unclear whether some orders were placed primarily to anticipate higher tariffs, so that no sustained increase in demand could be observed here," de la Rubia said.

(Additional reporting by Simon Ferdinand Eibach and Paolo Laudani, Editing by Rachel More and Toby Chopra)

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