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German Factory Orders Rise Sharply in January

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German Factory Orders Rise Sharply in January

German factory orders expanded faster than forecast in January, a sign recovery in Europe’s largest economy continues to take shape.

Factory orders climbed 1.2 percent in January, after declining 0.2 percent the previous month, the Economic Ministry in Berlin reported today. Compared to year-ago levels, factory orders rose 8.4 percent. The consensus of economists called for a monthly gain of around 0.7 percent and an annualized gain of 7.5 percent.

The German economy accelerated at a faster pace than forecast last quarter, despite a slowdown in domestic consumption. This in-turn helped fuel a faster expansion in the broader euro area. The Eurozone economy accelerated 0.3 percent in the final three months of 2013. Annually, fourth quarter GDP expanded 0.5 percent.

Data on January factory orders show Germany’s export market continued to gain momentum at the start of the year. German exports rose 1.9 percent in the fourth quarter of last year, the Federal Statistics Office confirmed today. Exports to fellow European Union countries rose 3.3 percent in the same period.

“The stronger momentum [in factory orders] is basically driven by foreign demand, both inside and outside the euro area,” the ministry said in a statement. “Domestic demand is also developing positively, albeit more moderately.”

In policy news, the European Central Bank opted to hold its benchmark lending rate at 0.25 percent. The decision, which was not unexpected, shows the central bank is relatively confident deflation poses no serious risk to Eurozone recovery.

In currency news, the euro was trading sharply to the upside. In the early North American session, the EURUSD pair had gained more than 100 pips.

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