By Maria Martinez
(Reuters) -German industrial orders rose more than expected in September thanks to large-scale orders such as aircraft, ships, trains and military vehicles, according to data released on Wednesday.
Orders increased by 4.2% on the previous month on a seasonally and calendar adjusted basis, the federal statistics office said.
A Reuters poll of analysts had pointed to a rise of 1.5%.
In principle, this should be a positive signal pointing to a cyclical recovery in foreign trade, said Sebastian Dullien, from the Macroeconomic Policy Institute IMK. But, in reality geopolitical developments were likely to prevent such a turnaround, he added.
"The looming election victory of the Republican Donald Trump in the U.S. threatens German industry with further, potentially severe setbacks in the coming months," Dullien said.
Trump repeatedly announced high tariffs on European products during the election campaign.
Incoming orders could suffer from such tariffs in the medium to long term, said Thomas Gitzel, chief economist at VP Bank.
Domestic orders rose by 3.6% in September on the month and total foreign orders by 4.4%, with new orders from the euro zone increasing by 14.6%. New orders from the rest of the world fell by 1.6%.
"Reforms, above all a reduction in bureaucratic hurdles for new investments, are now urgently needed to help the ailing manufacturing industry," Gitzel said.
When large-scale orders are excluded, new orders were 2.2% higher than in the previous month.
The less volatile three-month on three-month comparison showed total new orders rose by 4.2% in the third quarter compared with the previous quarter, while new orders excluding large-scale orders were down 0.6%.
The statistics office revised the data for August to a 5.4% decline compared with July, a less pronounced slump than the 5.8% previously reported.
"At best, we can speak of a stabilization of orders at a low level," said Ralph Solveen, senior economist at Commerzbank (ETR:CBKG), adding September's figure did not signal a sustainable turnaround.
The HCOB Germany Manufacturing Purchasing Managers' Index rose to 43.0 in October from 40.6 in September, its highest level since July but still far below the 50-point mark that separates contraction from growth.
Leading indicators suggest that the underlying trend in new orders and manufacturing remains subdued, said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.
"We can be fairly certain that factory orders dropped sharply in October, assuming a drop in Airbus orders on the month, and this will set the stage for a fall over the fourth quarter as a whole," Vistesen said.