German factory orders rose the most in two and a half years in December amid a surge in investment-goods demand, suggesting that the strong run of Europeâ€™s largest economy at the end of the year is set to continue.
Orders, adjusted for seasonal swings and inflation, gained 5.2 percent from November, when they fell a revised 3.6 percent, data from the Economy Ministry in Berlin showed on Monday.
Thatâ€™s the highest since July 2014. The typically volatile reading compares with a median estimate for a 0.7 percent increase in a Bloomberg survey. Orders were up 8.1 percent from a year earlier.
Economic expansion accelerated in the final quarter of 2016, and a jump in orders in the three months bodes well for manufacturing at the start of this year. Companies from Siemens AG, Europeâ€™s largest engineering company, to Airbus Group SE, which assembles most of its single-aisle planes in Hamburg, won contracts in December.
While the Bundesbank predicts job creation should continue as confidence improves, growing uncertainty in the region and beyond risks hurting Germanyâ€™s export-focused manufacturing sector. At the same time, accelerating inflation threatens to slash consumersâ€™ purchasing power.
â€œAll recent data point to a very strong start for 2017 in Germany and in the euro area after a very good fourth quarter,â€ said Julian Trahorsch, an economist at Landesbank Baden-Wuerttemberg in Stuttgart. While he estimates the economy expanded 0.6 percentage point in the three months through December, Trahorsch said heâ€™s not â€œoverly optimistic for 2017 because there are several major headwinds for the economy.â€
Germany will report gross-domestic-product data on Feb. 14, after the statistics office said at the start of the year that growth accelerated to around half a percentage point from 0.2 percent in the third quarter. The economy grew 1.9 percent in 2016, the most in five years.