Frankfurt, Germany — German factory orders rose more strongly than expected in June, official data showed Tuesday, boosting hopes that a recovery in Europe’s top economy could be gaining momentum.

Orders in the country’s crucial manufacturing sector rose 3.9% from a month earlier, according to federal statistics agency Destatis, an uptick that followed five consecutive months of falls.

That was higher than an increase of 1% forecast by analysts surveyed by financial data firm FactSet.

But the order data, closely watched as an indicator of future business activity, was 11.8% lower from the same month a year earlier, according to Destatis.

June’s month-on-month rise was driven by domestic orders, which rose by 1.2%, while demand from abroad continued to fall and was down by 3.1%.

The uptick comes after a recent run of lackluster data and may boost optimism a rebound is finally taking hold after the German economy shrank last year due in part to an industrial slowdown.

Along with recent positive figures on eurozone bank lending, the orders data “could suggest a recovery in fixed investments in the second half of the year,” said the economy ministry in a statement.

“However a more general revival in industrial activity is unlikely for now given the subdued mood among businesses and continued weak foreign demand,” it added.

Jens-Oliver Niklasch, analyst at LBBW bank, said that while June’s figures “exceeded all expectations,” they were “not enough to break the downward trend.”
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