1ST LEAD German economy regains momentum as industrial sector rebounds By Andrew McCathie, dpa

Frankfurt (dpa) - The German economy has regained momentum with key factory orders rebounding strongly and the nation‘s central bank revising up its growth outlook.Industrial orders in Europe‘s biggest economy jumped a more-than-forecast 1.8 per cent in October, rebounding from a 0.7-per-cent slump in September thanks to both strong domestic demand and a pickup in the eurozone economy, the Ministry of Economics said.Analysts surveyed by dpa-AFX had expected a 1.2-per-cent rise in October. In an optimistic half yearly report, Germany‘s central bank, the Bundesbank, said on Friday it had raised its growth forecasts for 2017 amid a solid rise in private consumption.The Frankfurt-based central bank said economic growth this year should come in at 1.7 per cent before accelerating to 1.8 per cent in 2016 - unchanged from its forecasts from six months earlier.However, the Bundesbank sees German gross domestic product growing by 1.7 per cent in 2017 - higher than the 1.5 per cent the bank forecast six months ago. "The main drivers are the favourable labour market situation along with strong increases in households‘ real disposable income," said Bundesbank chief Jens Weidmann.The gain in domestic demand is also helping to offset foreign trade, which Weidmann said is currently being hampered by a slump in demand from emerging market economies.But Weidmann said, "with export markets outside the eurozone expected to rebound and economic growth within the eurozone gaining a little more traction, the healthy underlying state of the German economy should stand out even more clearly over the next two years."The Bundesbank also expects inflation to average 2 per cent in 2016. This should help to return consumer prices in the eurozone closer to the European Central Bank‘s annual inflation target of 2 per cent.Low inflation has plagued the 19-member eurozone over the last year with consumer prices falling by 0.6 per cent at one point earlier this year. The October rise in factory orders brought to an end three consecutive monthly falls in the data. The ministry also revised up the September decline from an originally estimated 1.7-per-cent contraction."After a weak period for manufacturing orders during the third quarter, the latest data points to a timid recovery," the ministry said."Demand from the eurozone is picking up markedly, suggesting a continued recovery in our European partner countries," it said echoing the Bundesbank comments. The gain in orders was despite bulk orders coming in below average in October, the ministry said. "The increase (in orders) is a good indication of a recovering German economy," said Thomas Strobel, economist with Italy‘s Unicredit BankHelping to spearhead the October gain in order books was a 2.4-per-cent increase in orders dispatched to the eurozone.This led to total foreign orders rising by 1.8 per cent, the ministry says. Orders outside the currency bloc were up 1.4 per cent.Inland orders grew by 1.7 per cent in October, the ministry says. The solid gain in the order books figures has raised hopes for next Monday‘s industrial production data, which is currently forecast to show output rebounded by 0.6 per cent in October from a 1.1-per-cent fall in September.