German Industrial Output Growth Accelerates; Exports Fall

(RTTNews) - Germany's industrial production growth accelerated more than expected in February but exports declined amid rising imports, pushing the trade surplus below expectations, official data revealed on Monday.

Industrial output posted a monthly growth of 2.1 percent, following a revised 1.3 percent rise in January, Destatis reported.

This was much faster than economists' forecast of 0.3 percent expansion and also marked the second consecutive increase.

Nonetheless, on a yearly basis, industrial production plunged 4.9 percent after easing 5.3 percent a month ago.

The monthly growth was driven by the 7.9 percent expansion in construction output. By contrast, energy output fell 6.5 percent.

Excluding energy and construction, industrial production gained 1.9 percent. The improvement was mainly due to the increase in production of the automobile industry and chemical industry.

Within industry, the production of intermediate goods increased 2.5 percent and that of capital goods gained 1.5 percent. Consumer goods output climbed 1.9 percent.

Capital Economics' economist Franziska Palmas said the large monthly increase in output confirms the sector has started the year on a better note.

However, the economist expects it to struggle over the rest of the year on the back of weak demand and reduced competitiveness.

Data showed that exports declined more than expected in February after recovering a month ago.

Exports dropped 2.0 percent month-on-month, in contrast to the 6.3 percent increase in January. Economists had forecast a monthly fall of 0.5 percent.

Meanwhile, imports logged an unexpected growth of 3.2 percent after rising 3.3 percent a month ago. This confounded forecast for a 1.0 percent drop.

As a result, the trade surplus fell to a seasonally adjusted EUR 21.4 billion from EUR 27.6 billion in January and also remained below economists' forecast of EUR 25.5 billion.

On a yearly basis, exports slid 1.2 percent, reversing a 1.6 percent rise. At the same time, the annual fall in imports slowed to 6.7 percent from 7.5 percent.

ING economist Carsten Brzeski said there is finally a reason for moderate optimism that at least the cyclical downswing has come to an end.

While private consumption has been a drag on the economy in the first months of the year, today's data provides hope that the economy could already have left stagnation in the first quarter, said Brzeski.