German economic recovery gathers pace

8th June 2010, Comments 0 comments

German industrial output rose again in April as Europe's biggest economy sprang out of its winter doldrums, pointing to strong growth in the coming months, analysts said on Tuesday.

Industrial production rose by 0.9 percent from the level in March, the economy ministry said, a day after industrial orders for April posted the second strong gain in a row.

The rise was stronger than expected, with analysts polled by Dow Jones Newswires having expected production to have risen just 0.3 percent on the month, following an increase of 4.3 percent in March.

A breakdown of the data showed construction gained 2.6 percent, continuing its rebound from a harsh winter, while manufacturing output grew 0.5 percent on stronger demand for intermediate goods used to make finished products.

Consumer goods production declined by 1.2 percent however, the result of a "boomerang effect" from strong increases in March, the ministry said.

On Monday, the ministry said German industrial orders had gained 2.8 percent in April from the previous month, defying forecasts for a slight decline.

Orders had already jumped by 5.1 percent in March, the figures showed, which indicated continued support for output in the coming months.

After suffering its worst post-war recession in 2009, Germany expects economic activity to expand by 1.4 percent this year.

Given the very weak level of industrial output in April 2009, a 12-month comparison this year showed a gain of 13.3 percent -- the highest rate since German reunification in 1990, Capital Economics economist Ben May noted.

He and other economists said the latest data and sentiment surveys show the German economy should record strong growth in the near term.

Reliable indicators signal "a further solid expansion in production and the overall economy also in the summer months," UniCredit economist Alexander Koch said.

Budget tightening to correct the eurozone's debt crisis was expected to curb growth later this year however.

© 2010 AFP

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