German Industry Ends Summer Lull With Best Rise in Six Years

  • Output was 2.6% higher in August vs estimated gain of 0.9%
  • Ministry says production is showing vigorous upward trend

An employee kneels inside the casing of a H-class turbine on the assembly line of Siemens AG's gas turbine factory, in Berlin, Germany, on Tuesday, Feb. 2, 2016. Siemens, Europe's largest engineering company, criticized the U.K. government for creating uncertainty in the energy industry, saying it hampers investment in gas plants, wind farms and factories.

Photographer: Krisztian Bocsi/Bloomberg

German industry rebounded from a summer lull with its best month in six years, keeping Europe’s largest economy on a solid footing in the second half of the year.

Output, adjusted for seasonal swings and inflation, increased 2.6 percent from July when it fell a revised 0.1 percent, the Economy Ministry in Berlin said on Monday. That’s the biggest increase since July 2011 and it pushed the year-on-year gain to 4.7 percent.

“The data is finally catching up with some of the very positive readings we have seen in recent business surveys,” said Jennifer McKeown, chief European economist at Capital Economics in London. “Given the supportive global environment and monetary policy, I don’t see much reason for any significant slowdown in growth in the second half of the year.”

The better-than-forecast figures may dispel concern that the recent appreciation of the euro would undercut German industry after factory orders also rebounded, rising the most since December as exporters benefited from global demand. The Bundesbank said the German economy will continue on its course of strong growth in the third quarter, albeit with slightly less momentum than in the first half of the year.

The euro rose 0.1 percent to $1.1744 at 12:55 p.m. Frankfurt time. The currency has gained more than 10 percent against the dollar this year, which could weigh on exports as well as push down inflation, with the latter a concern for European Central Bank policy makers as they decide the future of their bond-buying program.

So far, German business confidence has continued to hover near a record high, despite weakening for a second month in September. Monday’s industrial report showed manufacturing surged 3.2 percent in August, led by a 4.8 percent jump in investment goods production. Construction declined by 1.2 percent.

In a sign of improving confidence across the euro area, the Sentix index of investor sentiment rose in October to its highest level in more than a decade. In France, an industry sentiment gauge remained close to its strongest level since 2011.

— With assistance by Kristian Siedenburg, and Andre Tartar

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