German Industrial Output Rises More Than Forecast on Construction: Economy
German industrial output increased more than economists forecast in January, rebounding from a December slump as construction activity jumped.
Production (GRIPIMOM) rose 1.6 percent from December, when it fell 2.6 percent, which was the steepest decline in almost three years, the Economy Ministry in Berlin said today. Economists forecast a January increase of 1.1 percent, according to the median of 39 estimates in a Bloomberg News survey. In the year, production advanced 1.8 percent when adjusted for working days.
Today’s report is the latest to suggest that Europe’s largest economy is weathering the region’s debt crisis and may avoid a recession even as euro-area demand for its exports weakens. Business and investor confidence both jumped last month as Greece secured a second bailout and the European Central Bank flooded the banking system with cash.
“This is the first hard evidence of a tender rebound in the economy,” said Carsten Brzeski, an economist at ING Group (ILF) in Brussels. “While next month’s data may disappoint because of the harsh winter, the economy is robust enough to offset any negative impact from higher oil prices and weaker demand from other euro-zone countries.”
Unusually mild weather at the start of the year may have boosted construction before temperatures plummeted. Construction jumped 4.3 in January, today’s report showed. Production of investment goods rose 3.5 percent and energy output gained 1.7 percent. The ministry revised December output from an initially reported drop of 2.9 percent.
German 10-year bund yields and the euro stayed higher after the report, with the single currency trading at $1.3242 at 1:05 p.m. Frankfurt time.
Austerity measures across Europe are clouding growth prospects and curbing foreign sales. The 17-nation euro-area economy will shrink 0.3 percent this year, driven by contractions of 1.3 percent in Italy and 1 percent in Spain, the European Commission said on Feb. 23. Euro-area services output shrank more than estimated in February, a survey of purchasing managers showed March 5.
French business sentiment declined in February, the Bank of France said in Paris today. In Germany, factory orders fell 2.7 percent in January, led by a 5.5 percent slump in export demand, the ministry said yesterday.
Shares in Henkel AG (HEN3), the German adhesives maker, declined in Frankfurt trading today after the company reported fourth- quarter earnings that missed analyst estimates. Continental AG (CON), Europe’s second-largest tire maker, on March 1 scaled back its revenue forecast for 2012.
The global economy may also struggle to regain momentum. Australian employers unexpectedly cut jobs last month, South Korea’s central bank warned of “downside” risks to growth and Japan reported an increasing reliance on energy imports that threatens to damp its economic rebound.
Those reports highlighted headwinds for the Asia-Pacific region’s expansion as policy makers evaluate whether to add to stimulus implemented in recent months. With inflation pressures remaining, South Korean, New Zealand and Indonesian officials kept benchmark interest rates unchanged.
The European Central Bank and the Bank of Canada are also projected to keep borrowing costs on hold today to retain some firepower, Bloomberg surveys show. The Bank of England held its benchmark interest rate at 0.5 percent today.
The Bundesbank said on Feb. 20 the outlook for the economy has “improved perceptibly,” even though “risks relating to the sovereign-debt crisis remain.”
Economic growth will slow to 0.6 percent this year from 3 percent in 2011 before accelerating to 1.8 percent in 2013, according to a December forecast from the central bank.
“Germany’s economy is robust and has diversified enough to help offset a dependence on the euro area as the main export market,” said Jens Kramer, an economist at NordLB in Hanover, Germany.
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