German factory orders climb to the highest in over 5 years in January

The Federal Statistical Office of Germany released its monthly report on factory orders for January on Friday. The data suggested German industrial orders to have climbed in January attributed largely to mechanical engineering bookings and aerospace sector. Friday’s data stirred optimism in the German manufacturing sector to kickstart the quarter on a positive note despite the Coronavirus crisis.

Factory orders improved by 5.5% in January as compared to a 2.1% decline noted in December. Analysts had forecast a 1.5% increase in January in German goods contracts. January’s reading was branded the widest gain since July 2014.

Economist Jens-Oliver Niklasch’s Comments On Friday’s Data

According to economist Jens-Oliver Niklasch of LBBW bank:

“The strong increase is, of course, good news for the German economy. There was probably a catch-up effect here due to the timing of holidays at the end of last year, which was not covered by the usual seasonal adjustment. At the moment, however, figures from the pre-corona era should leave the financial markets comparatively cold.”

So far, 400 cases of Coronavirus have been reported in Germany that originated in Wuhan, China and is currently spreading rapidly across borders and is threatening to disrupt the global economy. The death toll attributed to the virus in China, however, remains at zero.

Being the largest trading partner for Germany, German manufacturers rely on supply and demand chains from China. The virus outbreak, therefore, is expected to keep the sector under pressure in the upcoming months.

As per the sources, hotels and transportation are among the top domestic businesses that have been hit by Coronavirus. The health emergency has also postponed multiple international trade fairs like the ITB Tourism Fair that was previously scheduled for this week in Berlin.

German Government Is Committed To Take All Necessary Measures Against Coronavirus

To support small and medium-sized companies cope with liquidity problems, Berlin is deploying schemes like short-time working programs that are likely to also help firms avoid layoffs.

German Economy Minister Peter Altmaier and Finance Minister Olaf Scholz recently reiterated that the government is committed to implementing all necessary measures that are required to protect Europe’s largest economy from the Coronavirus driven slowdown. Senior members of the German government are scheduled to meet and evaluate further options and measures on Sunday.

The EUR/USD currency pair continues to celebrate in the forex market having climbed to as high as 1.1255 on Friday. The next big move is expected later today following the U.S unemployment report.