Global Macro Service > Data Insights > Eurozone

German factory orders suggest Q4 rebound is underway

Recent survey data have tended to paint a fairly downbeat picture of Q4 activity. But German factory orders rose by 0.3% m/m in October, marking the third consecutive increase. Foreign demand as well as intermediate and capital goods orders were strong. Moreover, the 1% m/m surge in industrial turnover was the largest rise in a year and half of it was driven by the automotive sector.

The data bolster our view that German GDP will pick up to 0.6% in Q4, after the 0.2% contraction in Q3. The car sector’s rebound after last quarter’s soft patch, caused by new regulations, should be the key driver. Yet the turnaround in orders not only seems to be more broadly based across sectors and regions, but it’s also in contrast to gloomy surveys. And although an industrial boom like in 2017 is unlikely to occur, the sector’s outlook may be improving a little.

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