Surge in German Industrial Orders: A Sign of Increasing Foreign Reliance?

German industrial orders saw unexpected growth in September, driven by automobile and electrical equipment demand. Orders rose 1.1%, surpassing forecasts. August's figure showed a 1.9% rise excluding large items. Foreign demand is growing, as domestic orders fell. Economists expect domestic demand to strengthen next year with planned fiscal measures.

German industrial orders exceeded expectations in September, supported by robust demand for automobiles and electrical equipment, as reported on Wednesday. The federal statistics office highlighted a 1.1% monthly rise in orders within Europe's largest economy, adjusted for seasonality and calendar variations.

This climb surpassed analysts' projections of a 1% increase, according to a Reuters poll. When excluding high-cost items, new orders saw a more significant 1.9% increase from the previous month. Ralph Solveen, a senior economist at Commerzbank, noted that the core indicator, which offers a clearer view of underlying trends, remains somewhat stagnant. A broader three-month analysis reflected a 3.0% decline in new orders from the prior quarter.

The data also revealed a 3.5% increase in foreign orders while domestic orders dropped by 2.5%. This highlights a growing dependency on international markets, though this trend could shift, mentioned Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. Factors like higher infrastructure investment, tax breaks, and lower electricity prices next year alongside defense spending are anticipated to bolster domestic demand.

(With inputs from agencies.)