German industry fired on all cylinders in January, raising hopes of better-than-expected growth in Europe’s biggest economy this quarter despite flagging business confidence and the uncertain global economic outlook.
Industrial production rose 3.3% in January from the preceding month, while output increased 2.2% from January last year, adjusted for calendar effects, the Economy Ministry said on Tuesday.
The surge in output, which took most economists by surprise, was the sharpest monthly increase in German industrial activity since September 2009 and the highest production volume since records began in January 1991, according to the federal statistics office.
The country’s factories were busy across the board. Unusually mild winter weather contributed to a surge in activity in the construction sector where output rose 7% in January from the previous month. Production of capital goods, such as machinery and other industrial equipment, rose 5.3%, bouncing back from two months of declines.
“To say that this gets the year off to good start would be quite an understatement,” said Greg Fuzesi, an economist at J.P. Morgan in London.
German industrial production had been surprisingly weak in the second half of last year—out of sync with business-sentiment surveys—so most economists had expected only a mild recovery in January.
The data served “quite a blow to all those pessimists who see the German economy falling off a cliff,” said Andreas Rees, an economist at UniCredit in Frankfurt, underpinning expectations that Germany’s’ economy picked up speed at the start of the year.
Mr. Rees forecasts gross domestic product growth of 0.6% in the three months to end-March, up from 0.3% in the fourth quarter of last year. His prediction is at the high-end of economists’ growth forecasts.
[“Source-wsj”]
