German firms increase output at start of second quarter

[BERLIN] German industrial output rose slightly more than expected in April, data from the Economy Ministry showed on Tuesday, suggesting that the motor of Europe's largest economy was humming along at the start of the second quarter.

Following two consecutive falls in output, the rise added to signs that German firms were managing to muddle through despite a faltering global economy curbing appetite for their goods.

Output rose by 0.8 per cent on the month, just ahead of the consensus forecast in a Reuters poll for a 0.7 per cent increase.

The March reading was revised up to -1.1 from an initially reported fall of 1.3 per cent. "Industrial output got off to a decent start in the second quarter," the Economy Ministry said in a statement.

A breakdown of the April data showed makers of capital goods and the manufacturing and energy sectors reporting strong gains, helping to offset a 1.7 per cent decline in construction output.

Data published on Monday showed industrial orders dropped more than expected in April due to weaker foreign demand, particularly from non-euro zone countries.

But signs are growing that companies are becoming more optimistic about their outlook. "Sentiment among industrial companies has brightened somewhat in recent months," the Economy Ministry said.

After a weak phase in the second half of last year, the industrial sector should continue its moderate recovery, it added.

Factory activity rose to a three-month high in April with employers adding to their workforce for the first time since January, while business morale also brightened more than expected in May.

The German economy posted its strongest quarterly growth rate in two years at the start of 2016, but economists expect the pace to slow in the second quarter.

REUTERS