UPDATE 2-German Feb industry orders soar; growth outlook rosy

 * Orders rise 2.4 pct, vs expectations of 0.6 pct
 * Large orders help drive rise; investment goods up 4.5 pct
 * Euro extends gains on data
 * Economists see industry driving German GDP growth
 
(Adds details, economist quote)
 By Brian Rohan
 BERLIN, April 6 (Reuters) - Big-ticket purchases backed by 
robust domestic demand sent German industrial orders soaring in
February, data showed, brightening an already rosy outlook for
Europe's top economy and backing the case for ECB interest rate
hikes.
 Coinciding with signals that the government's economic
advisors are set to hike their growth forecasts for 2011,
Wednesday's economy ministry data showed orders grew by 2.4
percent on the month, with investment goods leading the charge.
 That compared with a Reuters forecast for an increase of
just 0.6 percent.
 The figures supported market expectations the European
Central Bank will raise rates several times this year, and
pushed the euro to a fresh 14-month high of 1.4317 against the
dollar.
 "The industry-led recovery is alive and kicking," said
Carsten Brzeski from ING. "The strong increase was driven by
both domestic and foreign demand."
 In February, Germany's engineering industry said it was
working flat-out to meet a flood of orders from China and
emerging markets, prompting sector trade body VDMA to raise its
output forecast to 10 percent growth for 2011. [ID:nLDE7190KX]
 The same month, industrial conglomerate Siemens (SIEGn.DE: Quote, Profile, Research)
won a contract worth over $1 billion to supply power plant
components to Saudi Arabia in one of its largest orders in the
Middle East.
 Germany recovered faster than expected from its deepest
recession since World War Two, and recent indicators show it is
on a steady path of growth, despite some hiccups in areas like
retail sales.
 Unemployment fell sharply for a second straight month in
March to its lowest level since figures for a unified Germany
were first published two decades ago, and wage settlements are
becoming more generous, making workers more inclined to spend.
 
 DRIVER FOR GROWTH
 Earlier on Wednesday, a source told Reuters that the
country's leading economic research institutes that advise
Berlin are set to raise their gross domestic product forecasts.
 The institutes now expect growth of over 2.5 percent this
year, the source said. Economy Minister Rainer Bruederle said on
Tuesday he would not be surprised if growth topped the official
government forecast of 2.3 percent.
 The February orders data also showed rising domestic demand,
a development likely to please domestic policymakers as well as
Germany's euro zone partners, who are anxious to boost their own
exports.
 Domestic orders rose 2.6 percent, outpacing foreign orders
which rose 2.3 percent, and orders of domestic consumer goods
rose 2.1 percent.
 "That is proof that consumption has risen thanks to a good
labour market and on the outlook for rising wages," said Stefan
Schilbe from HSBC Trinkaus.
 While retail sales fell unexpectedly in February, many
economists expect private consumption to contribute
significantly to German growth this year, mainly because
unemployment has been falling steadily.
 In the near term, German manufacturing stands well
positioned for growth. 
 A survey published this month of purchasing managers by
Markit showed industry logged its 18th straight month of
expansion in March even as growth slowed from a record high hit
in February.
 "Everything points to the trend in industrial production
sill going significantly upwards," said Ulrike Rondorf from
Commerzbank. "Manufacturing remains a driver for growth."
(Additional reporting by Annika Breidthardt, Eric Kelsey;
editing by Patrick Graham, John Stonestreet)

UPDATE 2-German Feb industry orders soar; growth outlook rosy