German factory orders boosted by overseas demand for capital goods

German factories whirred back to life in March much more quickly than markets had anticipated, boosted by a surge in orders for capital goods from overseas.

Factory orders jumped 1.9% month-on-month in March, according to the Federal Office of Statistics, pushing the year-on-year rate of increase from 0.7% to 1.7%.

Economists had been anticipating a rise of 0.6% over the month.

Foreign orders jumped by 4.3% month-on-month in March, led by a 6.2% increase in those hailing from outside the Eurozone, more than offsetting a 1.2% decline in domestic orders.

Particular strength was evident in orders for capital goods from outside the Eurozone, which surged by 10.9%.

Indeed, the statistics offica noted that excluding "large orders" then total orders would have decreased by 0.6%.

Orders from within the euro area were up by 1.1% over the month.

"Overall, survey data—PMI and IFO—indicates that year-over-year growth in new orders is close to zero, and we doubt the rise in March is the beginning of a recovery. We expect a fall next month," analysts at Pantheon Macroeconomics said in a research note sent to clients.

"Looks great, but probably not the beginning of a strong upturn."