BERLIN: German industrial orders rose more than expected in December, data showed on Tuesday, supporting expectations that Europe’s largest economy is on track for another year of solid growth after expanding by 2.2 per cent in 2017.

Factories registered a 3.8 per cent increase in orders, data from the Federal Statistics Office showed, far exceeding expectations in a Reuters poll for a modest 0.7 per cent rise.

A breakdown of the data showed most of the demand for German goods came from abroad. The eurozone, which is witnessing its broadest recovery in 10 years, made the largest contribution with an 11.2 per cent rise in contracts.

The data supports evidence that the European Central Bank’s easy money policy is stimulating consumption and increasing demand for German goods and services from a growing single currency bloc.

The December reading was the highest since August and capped a solid fourth quarter in which orders grew by 4.2 per cent, mainly helped by robust demand for capital goods.

“It is surprising how many orders are coming from abroad,” said Christiane von Berg of BayernLB. “This shows that not even the strong euro can slow down the economy.”

Orders fell by 0.1 per cent in November, an upward revision from a fall of 0.4 per cent previously reported.

The economy has been humming along despite political gridlock resulting from Chancellor Angela Merkel’s failure to form a government after an inconclusive election in September.

Her conservatives are hoping to seal a four-year government programme with the centre-left Social Democrats (SPD) this week. The government has revised up its growth forecast for this year to 2.4 per cent. The 19-country eurozone grew by 2.5 per cent in 2017, the highest rate in a decade, helped by the ECB’s low interest rate environment and cash-pumping in the single currency bloc.

“The growth momentum (of the fourth quarter) will carry through into the current quarter,” said Alexander Krueger of Bankhaus Lampe. “It looks as if industrial orders will rise even above the currently high level of demand.”

Reuters