German Industrial Output Rises as Economy Recovers

German industrial production rose for a fourth month in December, adding to signs that an expansion in Europe’s largest economy is gathering pace.

Output, adjusted for seasonal swings, was up 0.1 percent after a revised 0.1 percent gain in November, a report from the Economy Ministry in Berlin showed on Friday. The increase in the typically volatile figures compares with a median estimate of a 0.4 percent gain in a Bloomberg News survey. Production fell 0.7 percent from a year earlier.

The Bundesbank predicts that the economy has overcome its weak phase of early last year, as indicated by a 4.2 percent jump in factory orders in December and a third consecutive improvement in business confidence in January. The European Central Bank’s quantitative-easing pledge last month will further bolster the economy through a weaker euro exchange rate that’s making exporters more competitive.

“It is really difficult to see why the German economy should not accelerate further already in the first quarter of 2015 and beyond,” said Andreas Rees, an economist at UniCredit SpA in Munich. “The combination of already better hard data and signs of more to come as conveyed by leading indicators is a pleasant one, to say the least.”

Manufacturing output rose 0.5 percent in December from the previous month, driven by a 2 percent increase in basic-goods production, according to the report. Output of investment goods fell 1.2 percent in December, and construction declined 2.9 percent.

Order intake in the fourth quarter and an improvement of business confidence “are an indicator that manufacturing will continue to develop positively also in the coming months,” the Economy ministry said in the statement.

The European Commission raised its forecasts for German growth this year to 1.5 percent from 1.1 percent, and to 2 percent in 2016 from 1.8 percent.

“Germany’s economic growth is expected to strengthen gradually,” the European Union’s executive arm said on Wednesday. A robust labor market and low interest rates will underpin domestic spending as external demand improves, it said.

Before it's here, it's on the Bloomberg Terminal.