German industrial orders rose more than expected in May

By Maria Martinez

BERLIN, July 6 (Reuters) - German industrial orders rose more than expected in May, posting a considerable increase even when large-scale orders of aircraft, ships, trains and military vehicles are excluded.

Industrial orders rose by 1.9% on the previous month on a seasonally and calendar-adjusted basis, the federal statistics office said on Monday.

A Reuters poll of analysts had pointed to a rise of 1.5%.

"Based on this upward trend in orders, we expect a recovery in German industry, even if it is likely to be moderate," said Marco Wagner, senior economist at Commerzbank.

If large-scale orders are excluded, new orders are still 1.0% higher than in the previous month.

The headline figure was boosted by an 85% month-on-month increase under the "other transport equipment" category, which includes aircraft, ships, trains and military vehicles.

"Despite initial fears that the conflict in the Middle East would trigger new supply chain disruptions, German industry appears to have escaped with little more than a black eye," said Carsten Brzeski, global head of macro at ING, noting that the conflict has provided a boost to parts of German manufacturing.

He said initial support had come from stockpiling, adding that, more recently, German companies have benefited from Asian competitors being more exposed to disruptions affecting trade in the Strait of Hormuz.

The less volatile three-month-on-three-month comparison showed that new orders in the period from March to May were 0.2% lower than in the previous three months.

After revision of the provisional data, new orders in April decreased by 3.2% on March, less than the 3.8% decrease of the preliminary figure.

Foreign orders were up 2.2% in May on the month. Orders from the euro zone increased by 11.2% and orders from outside the euro zone declined by 3.2%.

Domestic orders rose by 1.3% on the month.

Although a rebound seems to be in the making, Wagner from Commerzbank said it would be moderate as German companies continue to suffer from an erosion of the country's competitiveness.

"Even though the federal government's reform package has brought progress on individual points, it is unlikely to represent a broad-based breakthrough," Wagner said.

(Reporting by Maria Martinez in Berlin and Tristan Veyet in Gdansk, Editing by Miranda Murray)