German Engineering Group Raises Output Forecast on Foreign Demand

Germany's VMDA engineering federation sharply raised its output forecast for the sector, citing better-than-expected demand from the eurozone and Asia, especially China.

"Everything is in place for a new upswing," said Ralph Wiechers, the VDMA's chief economist, after Europe's largest engineering group on Thursday raised its production forecast to plus 3% in 2017 from an earlier estimate of plus 1%, in real terms.

The new forecast highlights regional shifts helping Germany's trade statistics. Companies are benefiting from better demand from Asia and Europe--which could mitigate the risks to the German economy from the threat of rising U.S. protectionism and the U.K.'s exit from the European Union.

"The mood among businesses is exceptionally good," Mr. Wiechers said. Germany's Ifo think tank said Monday that its business climate index hit a record high in June, indicating strong economic activity.

Illustrating the trend, orders for Germany's important plant and machinery industry jumped 17% in May compared with May 2016, in real terms, boosted by strong foreign demand. It is "a clear signal" of better growth, said the VDMA, which represents more than 3,200 German engineering firms.

Write to Nina Adam at nina.adam@wsj.com

(END) Dow Jones Newswires

June 29, 2017 05:06 ET (09:06 GMT)