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German Industrial Output, Exports Recover In May

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Germany's industrial production and exports recovered in May, while the slump in imports continued, data from Destatis showed Monday.

Industrial output grew 0.3 percent month-on-month in May, in line with expectations, reversing a revised 2 percent fall in April.

On a yearly basis, industrial output decreased 3.7 percent and also bigger than the 2.3 percent fall seen a month ago. Output was forecast to drop 3.2 percent.

Excluding energy and construction, industrial production gained 0.9 percent in May.

Another report from Destatis showed that exports advanced more-than-expected 1.1 percent month-on-month in May, in contrast to a 3.4 percent decrease in April. Shipments were forecast to advance 0.8 percent.

Meanwhile, imports dropped unexpectedly by 0.5 percent, following a 0.9 percent drop in April. Economists had forecast a 0.4 percent increase.

Consequently, the trade surplus increased to a seasonally adjusted EUR 18.7 billion from EUR 16.9 billion in the previous month.

On a yearly basis, exports advanced 4.5 percent versus a 0.2 percent drop in April. At the same time, growth in imports climbed to 4.9 percent from 2.5 percent.

On an unadjusted basis, the trade surplus climbed to EUR 20.6 billion from EUR 17.9 billion in the previous month.

Data showed that the current account surplus totaled EUR 16.5 billion in May compared to EUR 13 billion last year.

Economists noted that the recovery in production as suggested by the latest official data does not signal an end to the downturn in German industry.

The economy ministry said industrial economy is set to remain subdued in months ahead due to weak order intake and gloomy business climate.

Data released last week revealed that factory orders declined 2.2 percent in May reflecting a sharp decrease in foreign orders.

The German economy is likely to grow only slightly in the third quarter, following a likely contraction in the second quarter, Ralph Solveen, deputy head of economic research at Commerzbank, said.

Andrew Kenningham, Capital Economics' economist said it now looks almost certain that production declined in the second quarter overall, contributing to a sharp slowdown in German GDP growth, and the business surveys for June have been gloomy.

Bundesbank last month said the largest euro area economy is set to contract slightly in the second quarter as temporary factors that boosted first quarter growth faded.

The Purchasing Managers' survey showed that Germany's manufacturing remained the weakest-performer in the currency bloc. The sector contracted for the sixth month in a row as a slowdown in the auto industry weighed on order books.

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