German factory orders rise amid hope of milder recession

PMI survey showed conditions did not worsen in Novemer

German factory orders rose in October, a sign of hope for manufacturers in Europe’s largest economy as they struggle with inflation and elevated energy costs due to Russia’s war in Ukraine.

Demand increased 0.8 per cent from the previous month, beating the median 0.1 per cent estimate in a Bloomberg survey. The gain was due to large-scale orders, without which there would have been a 1.2 per cent decrease, the statistics office said Tuesday.

Fears of a deep winter slump have been tempered in part by warm autumn weather that allowed Germany to fill gas-storage facilities and lower the risk of disruptive shortages. A gauge of business expectations by the Ifo institute rose last month on optimism that the recession could be less severe than initially expected.

A survey of purchasing managers by S&P Global also showed conditions didn’t deteriorate further in November, though the data continued to point to a slowdown in manufacturing activity. Pressure on supply chains that’s long plagued the industry started to ease, helping cool some price pressures.

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German inflation, meanwhile, slowed to 11.3 per cent in November, feeding optimism that the surge in consumer prices may be peaking. Underlying inflation that strips out volatile factors including energy is still expected to remain elevated. – Bloomberg