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German Factory Orders Expand, EMU Economy to Follow?

Posted by Joseph Trevisani on Feb 6, 2013 12:15:00 PM

German industrial orders rebounded in December led by modest growth in exports, stirring hope that the Europe's largest economy might soon lead the union out of recession.


Factory orders climbed 0.8% following an unrevised 1.8% decline in November according to the Deutsche Bundesbank, the Federal Republic central bank.  Economists in the Reuters poll had forecast a 0.9% rise.  The increase was fueled by a 2.4% surge in export placements.  Domestic orders dropped 1.2%; they were negative in seven out of twelve months in 2012.


Orders have seconded recent gains in several sentiment indices.


Manufacturing PMI in January jumped to 49.8, the highest level in eleven months.  The gauge has been below the 50 division between expansion and contraction since last March.


The ZEW Survey measurement of current economic sentiment rose to 7.1 in January its strongest reading in three months.  Its six month equivalent soared to 31.5 from 6.9, the most optimistic economic judgment by German business leaders since May 2010.


The Ifo Survey for January improved in all particulars: the overall business climate measure went to 104.2 from 102.4, the best score  since last June; current assessment  rose to 108.00 from 107.1; expectations for the business environment in six months’ time jumped to 100.5 also the best level since May.


The German economy is predicted by the IMF to expand only 0.6% in 2013 while the next three largest  economics in the EMU, France, Italy and Spain  will perform even more poorly, France 0.3%, Italy -1.0% and Spain -1.5%.  In 2012 Germany grew 0.9% and France 0.2%. Italy shrank 2.1% and Spain 1.4% according to the IMF. 


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