Germany's industrial output unexpectedly increased in March as all of the major industrial sub-groups recorded growth, in a sign that that the economy likely avoided further contraction in the first quarter.
The impressive industrial performance, along with unexpected growth in factory orders, suggests that the upturn in the sector could be sustained in the coming months.
Industrial production increased a seasonally adjusted 1.2 percent sequentially in March, after gaining a revised 0.6 percent in February, data released by the Ministry of Economics and Technology showed Wednesday.
Economists had forecast output to dip 0.1 percent, following the previous month's originally reported 0.5 percent gain.
The overall growth reflected a 2.1 percent rise in capital goods production and 0.6 percent growth in output in the intermediate goods industry. Consumer goods output was higher by 1 percent than in February.
On an yearly basis, industrial production decreased 2.5 percent, faster than February's revised 1.7 percent fall. The rate of contraction was forecast to accelerate to 3.8 percent from 1.8 percent originally reported for the previous month.
During the three months ended March, industrial output moved up 0.2 percent from the preceding quarter. The Ministry said that the improvement in new orders and an expected recovery in the construction sector would give further boost to the sector in the coming months.
Underscoring the upturn in the German industrial sector, government data yesterday showed that new orders in the manufacturing sector unexpectedly increased in March, supported by strong demand from the euro area.
In contrast to the recent positive data, the purchasing managers' survey for April showed that the German manufacturing sector contracted at the fastest pace since December 2012. New orders dropped for the second straight month, and at the fastest pace so far this year.
The construction sector, meanwhile, contracted at a notably slower pace in April than in the previous month when activity was disrupted by the unusually bad weather.
In April, a survey by the Ifo Institute showed that German business confidence deteriorated sharply in April due to increasing caution among companies, casting doubt about the ability of the economy to recover strongly in the coming months.
While releasing its latest Spring 2013 Forecast last week, the European Commission slashed the growth outlook for Germany for this year to 0.4 percent from the previously estimated 0.5 percent. The forecast for 2014 was cut to 1.8 percent from 2 percent.
Last month, the Economy Ministry had raised its growth outlook for 2013 marginally to 0.5 percent from 0.4 percent. Growth is forecast to improve to 1.6 percent next year.
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April 10, 2026 16:21 ET Inflation data from the U.S. was the main data event this week as the conflict in the Middle East continue. The minutes of the latest Fed policy session and the survey data on the services sector also made headlines. In Europe, manufacturing orders data from Germany was in focus. Price data from China drew attention in Asia.