Export demand keeps German factory production buoyant

Germany, once the world's top trading nation, looks set to regain that position with a steady rebound in global demand for `Made in Germany' products, despite a slowdown in China, Germany's third-biggest trading partner.

While domestic orders fell by 1.2 per cent, foreign demand rose by 4.3 per cent, with orders from euro zone countries edging up by 1.1 per cent and bookings from countries outside the currency bloc soaring by 6.2 per cent.

Overall orders for 'Made in Germany' goods were up 1.9 per cent in March, the biggest increase since June last year, official data released by the economy ministry showed. Much of the March demand, however, came from countries outside the euro zone, data showed.

Demand for German industrial products, adjusted for seasonal swings and inflation, rose 1.9 per cent in March, keeping factory production buoyant, in a sign that growth in Europe's biggest economy may extend into the second quarter despite a lull in domestic demand.

German industry seems to have gained from expansion of the US economy (despite the Volkswagen issue) and recent positive economic news from China.

Demand for capital goods and consumer products surged, while demand for intermediate goods was weaker than in February.

The data for February was revised up to a fall of 0.8 per cent from a previously reported drop of 1.2 per cent.

For the whole of the January-March quarter, industrial orders rose 0.5 per cent on the quarter, with bookings from abroad increasing by 2.0 per cent and domestic orders falling by 1.3 per cent.

March figures suggested a further pick-up in industrial output in the coming months after making a solid start to the year.

"Despite the overcast foreign trade environment, German industry was able to post a noticeable increase in orders from abroad," the economy ministry said in a statement, adding it expected industry to continue its moderate growth pace.

Analysts expect the German economy to have probably expanded by around 0.6 per cent on the January-March quarter nearly double the rate in the fourth quarter.

Germany's economy ministry is expected to release data on the country's gross domestic product (GDP) for the first quarter on Friday.

In 2015, the economy grew by 1.7 per cent, the strongest rate in four years, driven mainly by strong private consumption and higher state spending on refugees.