German Industrial Output Makes Surprise Jump

Strongest improvements were in the automotive and machinery sectors

In September industrial output jumped by 2.7% boosted by production of equipment for investment, official data showed on Nov. 9.

This was nearly three times the increase expected by analysts, providing strong new evidence that the German economy, the biggest in Europe and heavily based on exports, is pulling away from its worst post-war recession.

The data are the latest in a series pointing to brighter times ahead for Germany, Europe's economic powerhouse and one of the world's leading exporters. Germany has a particularly strong reputation for making and exporting machine tools and machinery, and a rise of activity in these sectors is a signal that demand for investment goods, a fundamental factor of world growth, is picking up.

UniCredit economist Alexander Koch said: "The strongest improvements were observed in automotive and machinery."

The national statistics office Destatis said that exports had gained 3.8% in September as a global increase in activity spurred demand for German capital goods, those used to make finished products.

"Industrial activity has eventually turned around in (the) summer, following an unprecedented massive drop of close to 20% during the preceding five quarters. The rise in the third quarter was the strongest since reunification. And the impressive recent performance in new orders, driven by demand from abroad, bodes well for a continuing solid rebound in industrial production also in the coming months, Koch said.

Berlin has recently raised its view on economic output as a whole this year, forecasting a contraction of between 4%-5%, compared to a previous estimate of 6%. Nevertheless, even a shrinking of 4% would be clearly the worst recession since the Federal Republic of Germany was founded after World War II.

Copyright Agence France-Presse, 2009

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