German Production Jumps Most Since January on Investment

  • Output rose 2.5% from prior month vs. estimated 1% gain
  • Economy Ministry says data show moderate revival last quarter

German industrial production jumped more than economists estimated in August on surging output of investment goods, according to figures released by the Economy Ministry in Berlin.


Key Points

  • Output, adjusted for seasonal swings and inflation, rose 2.5 percent from July, when it dropped 1.5 percent
  • Increase is biggest since January; median forecast was for 1 percent gain
  • Production was up 1.9 percent from a year earlier

Big Picture

The report comes after factory orders rose the most in five months in August and German business sentiment surged to the highest level in more than two years in September. Even so, the Bundesbank has toned down its outlook, pointing to slower growth in the third quarter, and concerns remain over the consequences of Britain’s decision to leave the European Union.


Economist Takeaways

“With today’s data, the outlook for the third quarter all of a sudden looks much brighter,” said Carsten Brzeski, chief economist at ING-Diba AG in Frankfurt. “Looking beyond the third quarter, however, there is no reason to get overly excited about industrial production. Capacity utilization is still only at its historical average and companies do not consider equipment to be a limiting factor to production, suggesting that investment should remain weak.”


Other Details

  • German Economy Ministry says data point to moderate revival of industrial activity in third quarter
  • Manufacturing output surged 3.3 percent, driven by 4.7 percent increase in investment-goods production and a 3.3 percent jump in consumer goods
  • Energy output rose 1.1 percent
  • Construction fell 1.2 percent
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