German factory orders unexpectedly jumped the most in three years in June, a sign that Europe’s largest economy is stabilizing.

Demand rose by 7% from May, defying all economist projections for a drop. The surprise increase was down to major orders, without which the data would have shown a 2.6% decline.

While the report signals improvement, the gain also reflects a rebound after a 10.9% drop in March, which has now been “compensated for,” according to statistics officials.

On a three-month basis, orders were up only 0.2%, an outcome that chimes with the economy’s overall performance in the second quarter, when it stagnated after a winter recession.

The outlook is less promising, with manufacturing PMIs for July painting a dire picture. The industry has been suffering from poor demand in China, the world’s No. 2 economy, which is itself losing momentum.

German manufacturing data due for release on Monday may still show ongoing weakness. Output probably fell in June, according to analyst estimates that suggest it remains lower than in the first quarter.

--With assistance from Joel Rinneby and Mark Evans.