German industrial production was bolstered by investment-goods output in February, highlighting improved confidence in the recovery in Europe’s largest economy.
Output, adjusted for seasonal swings, rose 0.2 percent after a revised 0.4 percent drop in January, a report from the Economy Ministry in Berlin showed Thursday. The increase in the typically volatile figures compares with a median estimate of a 0.1 percent gain in a Bloomberg News survey. While investment-goods production surged 1.2 percent, a slump in construction damped output.
Business confidence rose for a fifth month in March and unemployment dropped to a record low, underscoring optimism that the economy is gaining momentum. At the same time, an unexpected drop in February factory orders indicates that the recovery is still prone to risks.
“The German industry currently has more momentum than suggested by headline numbers,” said Carsten Brzeski, chief economist at ING-DiBa AG in Frankfurt. “Confidence indicators and order books send encouraging signals for growth of industrial production in the coming months.”
In a separate report, the Federal Statistics Office said exports climbed 1.5 percent in February, and imports were up 1.8 percent on the month. Germany’s trade balance widened to 19.2 billion euros ($20.7 billion) in February from 15.9 billion euros in January. The current-account balance, which rose to a record in 2014, expanded to 16.6 billion euros from 15.9 billion euros.
The euro was little changed after the data and traded at $1.0746 at 9:25 a.m. Frankfurt time.
Manufacturing output rose 0.5 percent in February from the previous month, and energy jumped 1.2 percent, according to the Economy Ministry report. Construction declined 3.1 percent after a 3.9 percent gain the previous month.
“After the weather-related high output level in January, construction was expectedly weaker in February,” the Economy Ministry said in a statement. “Given the positive sentiment of companies, industrial production in the first quarter should have risen slightly.”
Production fell 0.3 percent from a year earlier, the ministry said. It initially reported an output increase of 0.6 percent on the month for January that would have been the fifth in a row.
“We expect Germany’s industrial sector to continue to grow robustly in the coming months,” said Aline Schuiling, senior economist at ABN Amro Bank NV in Amsterdam. “It is supported by the weak euro, historically low interest rates and strong domestic fundamentals.”