German industrial production rose for a fifth month in January in a sign that the momentum in Europe’s largest economy is strengthening.
Output, adjusted for seasonal swings, was up 0.6 percent in January after a revised one percent gain in December, a report from the Economy Ministry in Berlin showed Friday. The increase in the typically volatile figures compares with a median estimate of a 0.5 percent gain in a Bloomberg News survey. Production climbed 0.9 percent from a year earlier.
German economic growth accelerated in the fourth quarter as lower oil prices and a weaker euro boosted consumption and underpinned business confidence. While factory orders declined, more than analysts predicted at the beginning of the year, large-scale asset purchases by the European Central Bank will provide further stimulus.
“The lower oil price lifts purchasing power not only in Germany but also abroad; hence, it is good news for internal demand and German exports alike,” said Andreas Rees, an economist with UniCredit SpA in Frankfurt. “The weaker euro exchange rate provides further tailwinds for export-dependent companies.” The euro was little changed after the report and traded at $1.1018 at 8:14 a.m. Frankfurt time.
January production was driven by a 5 percent surge in construction, with manufacturing and energy output unchanged from the previous month, according to the report. Investment-goods output rose 0.5 percent while production of basic and consumer goods each fell 0.4 percent.
Continuing Recovery
“The positive result in January, as well as the upwardly revised data for the previous months confirm: the recovery of the German economy is continuing,” the ministry said. While manufacturing output was damped by flexible holidays, construction benefited from mild weather, it said.
Although factory demand fell 3.9 percent in January, compared with a forecast decline of 1 percent, the ministry said on Thursday that the trend for orders and the industrial economy remains upward.
The German economy is on track for growth of 0.3 percent in the first quarter, London-based Markit Economics estimated this week on the basis of its survey of purchasing managers. Business confidence as measured by the Ifo Institute rose for a fourth month in February to the highest level since July.
Continental AG, Europe’s second-largest maker of vehicle parts, said on Thursday it plans to increase revenue by at least 45 percent by the end of the decade amid rising car demand and growing sales at its industrial unit.
ECB President Mario Draghi said yesterday that sovereign-bond purchases will start on Monday and will contribute to a return of inflation to the central bank’s goal. ECB economists project consumer prices to rise an annual 1.8 percent in 2017. “Our monetary-policy decisions have worked,” Draghi said.
