German industry rebounded more strongly than expected at the start of this year after factory output rose at its fastest pace in a year in February, boosted by strong growth in construction and car production.
The 2.1% monthly rise in output was the second solid month of growth for German industry after January’s figure was revised up to 1.3%, according to figures released by the Federal Statistical Office on Monday.
The increase was well above the 0.3 per cent rise forecast by economists polled by Reuters, who said the recent rebound in German industry made it less likely that Europe’s biggest economy would contract again in the first quarter.
However, industrial output is still 4.9 per cent below a year ago and about 8 per cent below its peak before the coronavirus pandemic.
The weakness of the industrial sector, hit by the rise in energy prices after the war in Ukraine and the decline in exports to China, contributed to the stagnation of the German economy, which contracted by 0.3 per cent last year, the weakest among the developed countries.
Last month, five German economic research institutes cut their growth forecasts, predicting that gross domestic product will expand by just 0.1 per cent this year, down from 1.3 per cent six months ago. The Bundesbank recently predicted that the economy would contract again in the first quarter.
The February figures were supported by growth of 7.9 per cent in the construction sector. There was also growth of 5.7 per cent in car production and 4.6 per cent in chemicals, as supply bottlenecks and energy price pressures eased.
