German industrial output exceeds expectations

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German industrial production grew more than expected in February despite a small drop in the construction sector, pointing to a robust start to the year, official data suggests.

Industrial output, a central driver of the German economy, expanded by 0.4 per cent in February from output in January, the economy ministry calculated in preliminary data.

That was better than the 0.2 per cent forecast by analysts polled by Dow Jones Newswires.

It followed a 0.7 per cent rise in January which was revised slightly down from the figure that was initially released.

“Full speed ahead,” commented Carsten Brzeski, of ING-DiBa, noting that despite the slight fall “the German construction sector is booming”.

“All in all, today’s numbers confirm once again that a strong growth performance, at least in the first quarter, is in the making.

“The German economy is powering ahead.”

Economic activity slipped 0.1 per cent in the construction sector after bounding 4.4 per cent a month earlier thanks to a milder winter, while manufacturing output grew 0.5 per cent.

The economy ministry highlighted in a separate statement that at the start of 2014 “industrial economic activity continued to intensify”.

Taking December to February, industrial production grew by 1.9 per cent compared to the previous three-month period to November.

Industrial orders, a key measure of demand for German-made goods both at home and abroad, also rose in February, driven primarily by strong domestic orders, data showed on Friday.

Christian Schulz, of Berenberg bank, said the relatively mild weather had contributed towards “a super-strong winter quarter”.

But he cautioned: “Emerging market wobbles and the Ukraine tensions could still catch up with the economy in March and limit the upswing at least a little bit.”

Meanwhile, the powerful BDI industry federation voiced optimism for growth in 2014 based on the first months of the year.

Its president Ulrich Grillo told reporters at an industrial fair in the northern city of Hanover that he believed it “possible” that gross domestic product could grow this year by 2.0 per cent, or even “a smidgen more than 2.0 per cent”.

Official forecasts currently are for 1.8 per cent growth this year.

The BDI also foresees German exports increasing by five per cent this year driven by a recovery among several of its eurozone partners.