Germany's August factory output surges

BERLIN • German industrial output posted its biggest monthly rise in more than six years in August, data showed yesterday.

The surge suggested the economy is firing on all cylinders again and set for solid growth in the third quarter, although a question about the make-up of the new government could introduce uncertainty.

The combined production of manufacturing, construction and energy increased by 2.6 per cent in the month after edging down by 0.1 per cent in July, data from the Economy Ministry showed.

"These figures are very good," Commerzbank economist Ralph Solveen said. He pointed to special factors such as plant holidays falling in July in some regions this year.

"Overall, we expect solid (gross domestic product) growth in the third quarter. Our estimate is roughly 0.6 per cent on the quarter," Mr Solveen said.

Manufacturing output rose by 3.2 per cent, its biggest rise since March 2010, as factories churned out more intermediate goods, capital goods and consumer goods in August. Energy output also rose while construction activity fell.

Manufacturers of cars and other vehicles were the main drivers behind the overall surge, the ministry said, also pointing to earlier plant holidays.

The ministry said industrial production had gained momentum since the start of the year. "The good business morale and the positive development in industrial orders point to a continuation of the solid industrial upswing," it said.

ING Bank chief economist Carsten Brzeski said the strong production data provided further evidence that the economy had left its summer lull behind and returned to maximum speed.

"With the expected investment programme of the new government, the current cycle should be extended by another couple of years," Mr Brzeski added.

The economy grew 0.7 per cent on the quarter in the first three months of the year and 0.6 per cent from April to June, driven by increased household and state spending as well as higher investment in buildings and machinery.

Leading economic institutes have raised their growth forecast for the German economy to 1.9 per cent in 2017 and 2 per cent in 2018.

The German government will present its updated projections for GDP growth, employment and inflation tomorrow.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 10, 2017, with the headline 'Germany's August factory output surges'. Print Edition | Subscribe