Volkswacht Bodensee - German factory orders rise more than expected

New orders increased 1.5 percent month-on-month, boosted by big orders for transport equipment, according to preliminary figures from statistics agency Destatis.

Analysts surveyed by financial data firm FactSet had forecast a rise of just 0.5 percent for orders, which are closely watched as an indicator of future business activity.

The figure for September was also revised up, to two percent from an initial reading of 1.1 percent.

The positive readings offer some relief for the eurozone's traditional economic powerhouse, which is struggling to recover from two years of recession driven by an industrial slump and weak demand in key markets.

"This does at least look a little bit like the bottom has been reached," said LBBW bank economist Jens-Oliver Niklasch, adding the efforts of Chancellor Friedrich Merz's government may be bearing fruit.

Merz has unveiled a massive spending blitz on defence and infrastructure to turn the economy around, although he has faced criticism that this campaign is moving too slowly.

The jump in the October reading was driven by an 87-percent surge for large orders in the category of transport equipment that includes aircraft, ships, trains and military vehicles, Destatis said.

The economy ministry said this came "against against the backdrop of defence procurement", without giving further details.

Domestic orders rose almost 10 percent but foreign orders dropped four percent, highlighting a turbulent geopolitical environment marked by US tariffs.

Despite the rosy figures, Niklasch cautioned that "we still have a long way to go before we really have reason to be confident," adding that the "general mood is very bleak".

The government is forecasting meagre growth of 0.2 percent this year, before the economy picks up speed in 2026.

W.Huber--VB