German industrial orders rise points to cyclical recovery

By Maria Martinez

(Reuters) - German industrial orders unexpectedly rose in April, driven by strong domestic demand, signaling a potential recovery in the manufacturing sector, official data showed on Thursday.

Orders increased by 0.6% month-on-month on a seasonally and calendar-adjusted basis, according to the federal statistics office, countering a Reuters poll of analysts that had forecast a 1.0% decline.

"This gives hope that the industry has passed the trough and that the German economy will pick up in the coming quarters," said Ralph Solveen, senior economist at Commerzbank.

The German economy grew in the first quarter due to exports and industry frontloading ahead of anticipated U.S. tariffs.

In April, foreign orders fell by 0.3% compared with the previous month, with new orders from the euro zone rising by 0.5% and new orders from outside the euro zone declining by 0.9%. Domestic orders rose by 2.2% on the month, the statistics office said.

Economists said that the increase in April was not driven by large-scale orders or U.S. demand, highlighting the positive data.

"This is a good start to the second quarter," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

Excluding large-scale orders, new orders were 0.3% higher than in the previous month.

Carsten Brzeski, global head of macro at ING, said the data suggested a continuation of the cyclical rebound in Germany's industrial sector.

"At least for now, the feared full reversal of the frontloading effect of the first quarter has not materialised," Brzeski said. "Instead, it looks as if the turning of the German industrial cycle is continuing."

A less volatile three-month comparison showed that new orders in the period from February to April were 0.5% higher than in the previous three months.

"After such a long economic dry spell, we are rather hesitant to speak of an upswing," said economist Jens-Oliver Niklasch from Landesbank Baden-Wuerttemberg, adding that orders had been on a downward trend for more than two years.

"But at least the outlook for the coming months is brightening considerably," he said.

(Reporting by Tristan Veyet in Gdansk and Maria Martinez in Berlin, Editing by Ludwig Burger and Louise Heavens)