German Industrial Output Increases 3.4%

Government says upturn might be temporary

German industrial production jumped by a surprise 3.4% in August from the level the previous month, figures released on Oct. 8 by the economy ministry showed. The ministry warned however that the upturn might be a temporary development amid the global financial crisis.

Analysts polled by Dow Jones Newswires had forecast that industrial output in the biggest European economy would slip by 0.4% on the month.

The figure represented a rare piece of good news for Germany, after Economy Ministry Michael Glos warned almost two weeks ago that the government would have to revise its growth forecast for 2009 lower owing to the crisis.

In July, German industrial output had fallen by 1.6% and it was feared that economy would fall into recession if it contracted in the third quarter, which ended on August 31.

But while the latest figure, which the ministry said was largely the result of the national vacation calendar, could keep German from falling into a technical recession, it was unlikely to be seen again in the following months. "The rather weak trend in orders and slumping business sentiment suggest that production will slow down in the coming months," the economy ministry said.

On Oct. 7, German industrial orders also recorded a surprise increase in orders in August, gaining 3.6% from July after eight successive monthly drops. There again, however, the economy ministry warned that prospects for the future remained "subdued."

Copyright Agence France-Presse, 2008

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