Volkswacht Bodensee - German factory orders up but outlook still muted

New orders, closely watched as an indicator of future business activity, rose 1.1 percent month-on-month, according to preliminary figures from federal statistics agency Destatis.

Analysts surveyed by financial data firm FactSet had predicted an increase of 0.6 percent.

Europe's biggest economy has been hit hard by an industrial slump, with the US tariff blitz adding to headwinds, but there had been hopes a rebound would gather pace this year.

However, the economy ministry cautioned that it was difficult to conclude an upswing was underway based on Wednesday's data.

"The order situation remains fragile in view of the ongoing geopolitical uncertainties and, most recently, uncertainties surrounding the supply situation" for some products, it said in a statement.

Already hit hard by the US tariffs, Germany's auto industry now faces the prospect of production stoppages after China banned exports of crucial Nexperia semiconductors, as the Netherlands and China fight for control of the chipmaker.

China at the weekend said it would allow exports of some of the chips again, but the details remain unclear.

In September there were increases in orders in the auto sector and for electrical equipment, according to Destatis.

Foreign orders jumped 3.5 percent, offsetting a decline in domestic orders.

LBBW bank economist Jens Oliver-Niklasch also cautioned the figures did not point to a brightening picture and that, looking at a less volatile quarterly comparison, orders were actually down.

"German industry remains in a difficult position," he told AFP.

"The global environment is currently unfavourable for German companies, and there are a lack of growth-promoting reforms."

D.Schlegel--VB