German Industrial Output Posts Biggest Gain in Four Months

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(Bloomberg) -- German industrial production increased more than forecast in March, providing a glimmer of hope for Europe’s largest economy after a raft of disappointing data.

The gain -- the biggest since November -- may encourage those European Central Bank policy makers who’ve pushed back against suggestions that the euro area is heading for a deeper slowdown. Chief Economist Peter Praet said on Monday there was no reason to worry about the health of the region’s economy.

German output rose 1 percent, beating the 0.8 percent median estimate in a Bloomberg survey. February’s decline in the typically volatile number was revised to 1.7 percent from 1.6 percent. Production was up 3.2 percent year-on-year.

What Our Economists Say

“Overall, Germany’s economy remains in good health and 1Q looks mostly like a blip. We’re expecting a revival of growth in 2Q before slowing a touch in 3Q.”
-- Jamie Murray and David Powell, Bloomberg Economics. Click to see their GERMANY INSIGHT

Previous data across the euro area had painted a downbeat picture, raising concern about the sustainability of expansion in the 19-nation economy and prompting the ECB to hold off from discussing an end to its stimulus measures. German factory orders have fallen for three straight months and business surveys have weakened.

The German central bank has been adamant that the first-quarter weakness was mainly the result of exceptional factors including strikes and a flu epidemic, an analysis echoed by the Economy Ministry on Tuesday.

“The overall external environment is positive, the orders are at record levels and the business climate above average,” it said. “After a quieter phase, output in the manufacturing industry should therefore pick up the pace again in the course of the year.”

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Even so, trade protectionism remains a risk. A separate report showed on Tuesday that German exports rose 1.7 percent in March, also rebounding from February’s decline but slightly below economists’ estimates. Imports unexpectedly slid 0.9 percent.

The trade surplus, which U.S. President Donald Trump’s administration has repeatedly criticized as a sign of an unfair trade advantage, widened to 25.2 billion euros ($30.1 billion) from 18.5 billion euros.

©2018 Bloomberg L.P.

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