May 9, 2017

German Exports Bolster Economy as Industrial Output Drops

German exports rose for a third month in March in a sign Europe's largest economy is benefiting from a pickup in global trade as industrial production dropped less than economists predicted.


Exports rose 0.4 percent from February, the Federal Statistics Office said on Tuesday. While an Economy Ministry report showed industrial output dropped 0.4 percent -- compared with a median estimate for a 0.7 percent drop in a Bloomberg survey -- that still marked a 1.1 percent gain for the first quarter.

"Despite the small drop in March, industrial production should have returned as a growth driver for the German economy," said Carsten Brzeski, chief economist at ING Diba AG in Frankfurt. "In fact, the construction sector alone has been one powerful source of economic growth."

The data come a day after a report showed German factory orders expanded for a second month in March, bolstered by demand from the 19-nation euro area. The Bundesbank has labeled sentiment in manufacturing "extraordinarily optimistic" amid favorable export prospects, predicting an acceleration of growth in the first quarter.

Economists forecast Europe's largest economy grew 0.6 percent in the three months through March. The Federal Statistics Office will release those figures on Friday.

"Momentum in the industrial sector revived somewhat in the first quarter," the ministry said in an emailed statement. "That holds true for both manufacturing and construction. Orders and business-climate indicators signal a continuation of the positive trend."

Output was up 1.1 percent in the January-March period, driven by a 4.7 percent surge in construction. In March, manufacturing dropped 0.5 percent. Investment-goods production fell 1.2 percent, while energy output slumped 2.5 percent. The trade balance widened to 25.4 billion euros ($27.7 billion) from 20 billion euros.

Bloomberg, by Carolynn Look