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German industrial orders rose at a ‘remarkable pace’ in August

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BERLIN, Oct 6 (Reuters)Orders for German-made goods rose more than expected in August, data showed on Tuesday, in a boost to hopes for a robust third-quarter in Europe’s largest economy as industry plays catch-up after the coronavirus shock.

Orders rose by an adjusted 4.5% compared with the previous month, ahead of economists’ forecast for an increase of 2.6% and driven by strong demand from the euro zone, suggesting firms are making progress on their way back to pre-crisis levels.

“The catch-up process for new industry orders is continuing at a remarkable pace,” the economy ministry said in a statement.

The German economy contracted by 9.7% in the second quarter as household spending, company investments and trade collapsed at the height of the pandemic.

The Ifo institute expects 6.6% output growth in the third quarter, then a slowing to 2.8% in the fourth quarter.

Economists were jubilant but warned that rising infection rates might cause a further setback.

“This is undoubtedly good news. It deserves a big round of applause. The recovery in incoming orders remains intact,” said Thomas Gitzel, chief economist at VP Bank.

The statistics office said the order intake was still 3.6% lower than in February, before lockdown measures were imposed to slow the spread of the coronavirus.

Economy Minister Peter Altmaier warned on Monday that Germany must avoid another shutdown of industrial activity, as rising COVID-19 infections cloud the growth outlook.

Figures from the statistics office showed that orders from abroad increased by 6.5%, boosted by a 14.6% surge in orders from the rest of the euro zone. Domestic orders rose by 1.7% on the month.

(Reporting by Caroline Copley Editing by Riham Alkousaa)

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