German factory production rises

Construction pauses

BERLIN, June 8, (AFP): Industrial production in Europe’s largest economy Germany rebounded faster than expected in April from a March slump, official data showed Thursday, beating analysts’ expectations.

Manufacturing grew 0.8 percent compared with the previous month, adjusting for seasonal effects, federal statistics authority Destatis said.

Analysts surveyed by data company Factset had predicted slower growth of 0.5 percent for April.

The statisticians also issued a revised figure for March, showing a fall in industrial output of just 0.1 percent — an improvement on the 0.4 percent previously reported.

A 5.7-percent expansion in energy production and a 1.0-percent boost from producer goods manufacturers pumped up April’s growth figure.

But the construction sector saw a pause after months of growth.

“Industrial production remains on an upward trend,” the Economy Ministry said in a statement.

“Solid developments in orders and revenue as well as excellent confidence levels suggest the upturn will continue in industry as well as construction.”

Figures published by Destatis Wednesday showed that factory orders — a volatile but closely watched indicator that often predicts manufacturing activity — fell back by 2.1 percent in April.

Nevertheless, “the current German recovery remains unbreakable,” argued analyst Carsten Brzeski of ING Diba bank.

High levels of employment and wages, low interest rates and government spending on the country’s influx of refugees are boosting domestic demand, while the weak euro supports exports, he pointed out.

“Today’s industrial production data have not only confirmed this growth picture but actually provide further evidence that this recovery could gain even more momentum,” Brzeski said.

The Economy Ministry said the number of large-scale contracts was below average for April. Adjusted to take account of that, orders overall were unchanged on the month.

A breakdown of the April data showed domestic demand decreased by 0.2 percent and foreign orders slumped by 3.4 percent. Demand from non-euro zone countries plunged by 4.8 percent while euro zone countries put in 1.4 percent fewer orders.

On the less volatile two-month comparison, orders increased by 1.8 percent but the level of contracts placed in April was 0.2 percent below the average level seen in the first quarter, the ministry said.

The data comes after a survey showed factory activity helped push Germany’s private sector growth to a six-year-high in May as demand from both domestic and foreign clients, especially in Asia, picked up.

The German economy expanded by 1.9 percent last year, the strongest rate in half a decade, as private consumption, state spending and construction increased. That momentum continued into early 2017, with the economy growing by 0.6 percent in the JanuaryMarch period, helped by higher exports.