Small Contraction for German Economy in Fourth Quarter

German factory orders rose again in October after a drop in orders in the previous two months. The increase, which was larger than expected, boosts manufacturers in Europe’s largest economy.

They are struggling with high inflation and sharply increased energy costs due to the Russian war in Ukraine.

New orders, which preview industrial production from the Netherlands’ leading trading partner, rose 0.8 percent in October from the previous month, Germany’s federal statistics agency Destatis reported. Economists had previously expected an increase of 0.1 percent.

The revival followed two months of sharp declines and was mainly due to a strong retrieval in orders from abroad. However, local orders did show a decline. Germany’s export-oriented economy has been battling the fallout this year from the Russian war in Ukraine, which has exacerbated supply chain problems and pushed up energy prices across Europe.

Fears of a deep winter crisis in Germany have already been partly tempered by the warm autumn weather, which allowed Germany to fill its gas storage facilities and reduced the risk of gas shortages in the industry.

In addition, the rise in factory orders in October and the recent improvement in business confidence provide “further indications that the recession may be weaker than feared,” Germany’s economy ministry said in a statement.

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