German industrial output rises more than expected in February

GERMAN industrial production rose significantly more than expected in February due in part to vehicle manufacturing, increasing 2.0 per cent on the previous month, the federal statistical office said on Thursday (Apr 6).

In a Reuters poll, analysts had pointed to a slight increase of 0.1 per cent.

The statistics office also revised the figure for January to a 3.7 per cent increase, up from 3.5 per cent. With the revision, the adjusted index of production since December 2022 rose by 5.8 per cent, which more than compensated for the significant decline of 2.4 per cent in December.

“German industry seems to have woken up from hibernation,” said Carsten Brzeski, global head of macro at ING. “Despite the strong rebound, industrial production is still slightly below its pre-pandemic level.”

Industrial output is expected to increase further in the coming months.

“A high backlog of orders, lower energy prices and easing supply constraints should continue to support production,” said Franziska Palmas, senior Europe economist at Capital Economics.

Pantheon Macroeconomics forecasts that industrial production will post a 3.0 per cent quarter-on-quarter expansion in the first quarter, comfortably reversing the 0.5 per cent decline in the fourth quarter.

Year on year, industrial production rose 0.6 per cent in February.

Production expanded in most economic sectors in February but manufacturing of motor vehicles, Germany’s largest industrial sector, accounted for a particularly large share of the increase, posting a 7.6 per cent increase month on month. REUTERS