Germany's industrial production stagnated in January as the contraction in manufacturing and energy output was offset by a recovery in the construction sector.
Industrial output remained flat in January from a month ago, when it rose by revised 0.6 percent, figures released by the Federal Ministry of Economics and Technology showed Friday. Output was forecast to grow by 0.4 percent.
Manufacturing output slipped 0.2 percent due to a sharp reduction in production of capital goods. Likewise, energy output slipped 2.3 percent. Offsetting these decreases, construction output grew 3 percent in January.
The ministry said the brightening sentiment indicators suggest an upcoming recovery.
Overall industrial production slipped by working-day adjusted 1.3 percent year-on-year, sharper than the 0.5 percent fall seen in the previous month. The rate of decrease slightly exceeded a 1.2 percent drop forecast by economists.
On an unadjusted basis, industrial output posted no change in January after declining 8.9 percent in December.
Data published yesterday showed an unexpected decrease in new orders in January. Factory orders slid 1.9 percent in January from a month ago, with a widespread fall in foreign and domestic demand.
However, the recent Purchasing Managers' survey revealed that the German manufacturing sector expanded in February on the strongest growth in new orders since May 2011. The manufacturing activity recovered for the negative territory for the first time in a year.
Moreover, retail sales in January recovered at the fastest pace in 6 years, suggesting that consumer spending bolstered domestic demand.
Bundesbank expects the German economy to return to growth in the first quarter and sees a 0.4 percent expansion for the whole of 2013. The German economy may see 0.5 percent expansion in 2013, before accelerating to 2 percent in 2014, the European Commission said in its Winter forecast last month.
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