Euro area demand sees German factory orders increase in September

German factory orders shot higher last month on the back of a surge in demand for capital goods from other euro area nations.

Total orders were 1.0% higher month-on-month in September, alongside a half percentage point upwards revision to the prior month´s estimated rate of increase to 4.1%.

Economists had anticipated that factory orders would drop by 1.1% in September.

Whereas domestic orders dipped by 0.1% on the month, those from abroad increased by 1.7% driven by a 6.3% surge in those from other Eurozone countries.

Meanwhile, orders from outside the Eurozone fell by 1.0%.

"Today's marginal expansion shows an on-going strong recovery in factory orders driven mainly by supportive external environment in the euro area. Germany has been the main growth engine in the euro area in recent years. These data suggest that this might be changing, with GDP growth in other euro area countries now spilling over back into Germany," Iaroslav Shelepko and Tomasz Wieladek at Barclays said in a research report sent to clients.

By sectors, orders for intermediate goods declined by 4.0% and those for consumer goods by 2.8%, yet those for capital goods rose by 4.9%.

Orders for transport equipment saw a very strong rise, increasing by 15.6% on the month.

"Overall, the September Factory orders are consistent with our real GDP growth forecast of 0.6% and 0.5% in Q3 and Q4 17, respectively, with risks clearly skewed to the upside."