German industry orders post biggest rise for more than two years

By Michelle Martin BERLIN (Reuters) - German industrial orders rose in October at their fastest pace for more than two years, data showed on Tuesday, suggesting that the industrial sector will prop up growth in Europe's largest economy in the coming months. Factories saw demand climb 4.9 percent on the month despite bulk orders being lower than usual, the Economy Ministry said. That was the biggest increase since July 2014 and far above the Reuters consensus forecast for a 0.6 percent rise. "The reading was very strong even without large-scale orders and that suggests it's more than just a flash in the pan," BayernLB economist Stefan Kipar said, noting that some firms might have brought orders forward. "I don't think we can keep this pace up until the end of the year," he said. Nonetheless, the data revives hopes of an industrial upturn in the fourth quarter after data last week showed engineering orders falling in October by 10 percent from the previous year and manufacturing growth slowing slightly in November. A breakdown of Tuesday's data showed domestic demand climbed 6.3 percent while foreign orders increased 3.9 percent despite a stagnation in contracts from the euro zone. A 7.2 percent surge in capital goods contracts drove the overall increase while factories making consumer goods and intermediate goods benefited from stronger demand. Orders for cars and car parts surged. In the less volatile two-month comparison, bookings increased 2.5 percent. The Economy Ministry said the data pointed to a good start to the fourth quarter and that it expected the industrial sector to revive in the October-December period thanks to rising demand and an improved business climate. German quarterly growth halved to 0.2 percent in the third quarter as exports weakened, but the economy is expected to perform better in the fourth quarter. The government expects domestic demand to propel growth of 1.8 percent in 2016. The latest forward-looking indicators also bode well, showing the mood among investors and consumers picking up while business sentiment has held steady at a high level despite greater uncertainty due to Donald Trump's victory in the U.S. presidential election. The orders data for September was revised up to a fall of 0.3 percent from a previously reported drop of 0.6 percent. (Additional reporting by Klaus Lauer; Editing by Madeline Chambers and Louise Ireland)