New orders for German manufacturing companies surged by 27.9 percent in June, official data showed Thursday, as a rebound which began in May accelerated following a deep slump sparked by the coronavirus pandemic.

Germany's economy ministry said the upturn in orders "took a major step forward in June" and have reached 90.7 percent of the pre-pandemic level in the fourth quarter of 2019.

However, it warned that any further recovery for the export powerhouse "will be slower" because foreign orders are lagging domestic demand.

Domestic new orders showed a surge of 35.3 percent In June, while those from abroad reached 22.0 percent.

Demand from within the European Union was up 22.3 percent, only slightly bettering the 21.7 percent jump from countries outside the bloc.

Capital goods -- or items used by companies to make other products -- led the charge, leaping 45.7 percent from a month ago.

New factory orders are back to nearly 91 percent of the pre-coronavirus level thanks to a surge in June New factory orders are back to nearly 91 percent of the pre-coronavirus level thanks to a surge in June Photo: POOL / Hendrik Schmidt

 

Consumer goods meanwhile showed a lacklustre rise of only 1.1 percent.

Germany has withstood the coronavirus shock better than many of its neighbours so far.

Stable infection rates saw it reopen factories, shops and restaurants from early May, allowing economic activity to pick up again.

Germany has also been able to avoid mass layoffs thanks to subsidised shorter-hours schemes, allowing unemployment to hold steady at 6.4 percent in July, the same rate as June.

Chancellor Angela Merkel's government has also rolled out rescue packages worth over a trillion euros to shield companies and employees, helping the likes of Lufthansa and TUI travel stay afloat.

But Europe's top exporter is highly vulnerable to virus setbacks in other countries that could lead to renewed shutdowns that once again disrupt supply chains and suppress demand.