The unexpected growth in Germany's industrial production in March indicates that a second consecutive fall in GDP was probably avoided in in the first quarter, Capital Economics European Economist Ben May said.
Capital Economics noted that while recovery hopes have been boosted by the strong growth in the service sector and improved overall sentiment, it is more likely that GDP will stagnate over the year as a whole.
The firm, meanwhile, cautioned that a sustained and robust recovery in the German industrial sector still seems unlikely, given the weakening industrial sentiment and falling manufacturing output. Latest data from the Commerce Ministry showed that industrial production increased a seasonally adjusted 1.2 percent month-on-month in March, marking the second consecutive growth, contrary to expectations of a 0.1 percent decline. The upturn was driven by strong gains in capital and consumer durable goods, which more than offset a 3.1 percent fall in construction output.
During the three months ended March, industrial production edged up 0.2 percent sequentially, reversing the fourth quarter's 2.6 percent contraction.
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