German official industrial output gains 1.2% in May

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German industrial output rebounded in May from a decline the previous month, provisional data from the economy ministry showed as economists scrutinised prospects for Europe's biggest economy.

Industrial production was 1.2 percent higher than in April, exceeding an average analyst forecast of 0.8 percent compiled by Dow Jones Newswires.

That followed a revised decline of 0.8 percent in April, which the ministry had initially estimated at 0.6 percent.

On Wednesday, the ministry said industrial orders had gained a monthly 1.8 percent in May, with an 11.3 percent gain in domestic orders offsetting a decline of 5.8 percent from abroad.

It said Thursday that in light of the "rather moderate" increase in orders, output growth "might be calmer in the months to come."

The German economy is officially expected to expand by 2.6 percent this year following growth of 3.6 percent in 2010, but Chancellor Angela Merkel has said the forecast could be raised above 3.0 percent in the coming months.

In Britain, official data showed Thursday that manufacturing rebounded in May by 1.8 percent on the month, only just compensating for a decline of 1.6 percent in April.

"Mays rise in German industrial production suggests that the eurozones largest economy continues to perform very well, but we doubt that this will last," Capital Economics senior European economist Jennifer McKeown commented.

On a sliding two-month basis designed to smooth out exceptional events, the economy ministry said output had gained just 0.4 percent in April and May.

A breakdown of the data on a monthly basis showed an increase of 2.5 percent in the production of capital goods and a rise of 1.1 percent in construction.

That sector had slumped by 5.0 percent in the previous reading.

Output of consumer goods stagnated in May however, after a slight increase of 0.5 percent in April.

Berenberg Bank senior economist Christian Schulz remained upbeat nonetheless, saying: "The strength of the German industrial sector is independent of the ongoing sovereign debt crisis, as long as financing conditions remain benign.

Schulz noted that "we expect a mid-summer lull before the expansion reaccelerates in the autumn."

© 2011 AFP

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