German Industrial Output Rises as Economy Recovers

Dec 29, 2014

German industrial production (GRIPIMOM) rose for a second month in October in a sign that a slow recovery in Europe’s largest economy is continuing.

Production, adjusted for seasonal swings, gained 0.2 percent from September, when it climbed a revised 1.1 percent, the Economy Ministry in Berlin said today. The increase was less than the median estimate of 0.4 percent in a Bloomberg News survey. Output advanced 0.8 percent from a year earlier.

While the Bundesbank last week cut its economic forecasts for the country through 2016, President Jens Weidmann said there’s reason to “hope that the current sluggish phase will prove to be short-lived.” Gross domestic product barely grew in the third quarter after a contraction in the three months through June.

“The German economy isn’t an economic juggernaut at the moment but it will keep expanding at the end of the year,” said Stefan Muetze, an economist at Helaba in Frankfurt. “That said, the pace is modest and, considering the euro area’s weakness, it will remain so for quite some time.”

Today’s report highlighted Germany’s reliance on private consumption for growth, with output of consumer goods climbing 0.5 percent in October as production of investment goods dropped 0.4 percent. Manufacturing rose 0.2 percent and construction jumped 1.4 percent. Energy output slid 1.1 percent.

“Industrial production has stabilized,” the economy ministry said. “After the weakness in the summer six months, a trough may have been reached in manufacturing as well as in construction.”

The European Central Bank left interest rates unchanged at record lows last week and President Mario Draghi said policy makers will reassess current stimulus measures and the threat of deflation early next year. More stimulus may come in the form of broad-based asset purchases if needed, he said.

Source: Bloomberg.com