German Factory Orders, French Industrial Output Post Rebounds After Recent Slumps — 3rd Update
MichelleGerman manufacturing orders and industrial production in France rebounded in September, signaling a recovery in the factory sector after trade uncertainty dented demand over the summer.
German manufacturing orders and industrial production in France rebounded in September, signaling a recovery in the factory sector after trade uncertainty dented demand over the summer.
Total orders rose 1.1% on month in Germany, swinging from a 0.4% fall in August, statistics agency Destatis said Wednesday. Meanwhile, industrial output in France climbed 0.8% on month, offsetting much of the 0.9% fall in the prior month, France's statistics agency Insee said. Both were better outcomes than expected by a consensus of economists polled by The Wall Street Journal.
Factory orders in Europe's largest economy were strong in the early part of the year ahead of the announcement of U.S. tariffs. Since then, they dropped as manufacturers struggled with the uncertainty of a new trade environment. The rise in orders in September followed four months of declines.
As members of the European Union, Germany and France face a 15% tariff on most of its goods imports to the U.S., which was agreed to in the summer.
The easing of trade uncertainty was reflected as foreign orders of German goods from outside the eurozone rose faster than those from inside the currency area in September. Meanwhile, domestic orders retreated, Destatis said, despite hope that Germany's new injection of government funds for infrastructure and defense could boost industry.
There still remains little sign of a sustained recovery in demand for German industrial goods, Commerzbank economist Ralph Solveen said in a note.
However, the effect of the European Central Bank's prior interest-rate cutting cycle, which frees up businesses to borrow more, as well as Berlin's expansionary fiscal policy should change the outlook in the coming year, he said.
In France, a domestic political stalemate--its government is yet to agree on a budget--didn't stop a return to growth for industrial production, albeit after a weak performance during the summer. Both in Germany and France, the sector was helped by aircraft manufacturing, with both nations home to the factories of the planemaker Airbus. German orders were also boosted by its traditional strength in the car industry, according to the data.
The eurozone's economy grew 0.2% in the third quarter of the year, a slightly faster pace than the prior quarter, and there are signs of a further pickup ahead.
The 20-nation currency area saw the strongest expansion in activity in October since May 2023, supported by demand as new business rose at a steep pace, according to a survey of around 5,000 businesses also published Wednesday.
"Finally, there's something positive to report about the eurozone economy again, said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, which helps compile the survey.
However, much of that surge in activity was driven by the services sector. Factory production growth ticked up only marginally, while services saw a marked acceleration of growth, the survey said.
There continued to also be a gap between German activity improving after the passing of the government's stimulus package, and weakening French output as political tensions damped people's willingness to spend.
"Keeping up this relatively strong growth momentum in the services sector over the coming months won't be easy," De la Rubia added.
