Germany's factory orders growth gained further momentum in August on foreign demand raising hopes for strong economic rebound in the third quarter.

Data released by Destatis showed that factory orders climbed 4.5 percent month-on-month, which was faster than the 3.3 percent rise in July and the 2.6 percent increase economists' had forecast. This was the fourth consecutive increase in orders.

Excluding major orders, real new orders in manufacturing were also 4.5 percent higher than in the previous month.

Domestic orders climbed 1.7 percent, while foreign demand logged a notable growth of 6.5 percent. New orders from the euro area went up 14.6 percent and that from other countries increased by 1.5 percent.

The economy ministry said "The catch-up process for new industry orders is continuing at a remarkable pace."

Manufacturers of intermediate goods reported an increase of 4.5 percent and orders for capital goods advanced 4.7 percent. Regarding consumer goods, new orders rose 4.2 percent.

On a yearly basis, manufacturing orders dropped at a slower pace of 2.2 percent, following a 6.9 percent decrease in July.

Manufacturing turnover dropped 0.1 percent on month in August versus a 5.2 percent rise in July.

A re-acceleration of industrial orders in August suggests that the manufacturing sector could outpace the service sector going into the final quarter of the year, Carsten Brzeski, an ING economist said.

Industrial production data for August is due on October 7. Production is expected to climb 1.5 percent on month, following a 1.2 percent rise in July.

Elsewhere, Purchasing Managers' survey showed that the construction sector contracted further in September amid an ongoing decline in new orders and pessimistic expectations for activity over the year ahead.

The construction Purchasing Managers' Index fell to 45.5 in September from 48.0 in August. Any score below 50 indicates contraction.