Strong domestic demand propels German industrial orders

By Michael Nienaber

BERLIN (Reuters) -German industrial orders rose for the second month in a row in February driven by strong domestic demand, data showed on Thursday in a further sign that manufacturers are set to cushion a pandemic-related drop in overall output in the first quarter.

The growth outlook for Europe's largest economy remains clouded, however, by a more contagious virus variant and rapidly rising COVID-19 cases that could force authorities to tighten restrictions again in the coming weeks.

The data published by the Federal Statistics Offices showed orders for industrial goods increased by 1.2% on the month in seasonally adjusted terms, in line with a Reuters forecast.

Excluding major contracts, such as orders for planes, bookings for industrial goods even rose by 1.5% on the month, the office said.

The increase in February came after a downwardly revised rise of 0.8% in January.

Domestic orders jumped by 4% on the month while foreign orders fell by 0.5%. Still, bookings from other euro zone countries increased by 2.7%.

The increase in the headline figure was equally driven by strong demand for capital and consumer goods, the economy ministry said.

"In particular, orders in the important automotive and mechanical engineering sectors once again developed positively," the economy ministry said.

The solid industrial orders data chimed with a survey among purchasing managers released on Wednesday that showed growth in Germany's private sector accelerated in March to its highest level in more than three years.

The jump in IHS Markit's composite PMI was mainly driven by factory activity which grew at the fastest pace on record thanks to a surge in demand from the United States and China, though the services sector also fared surprisingly well.

(Reporting by Michael NienaberEditing by Caroline Copley)

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