Germany got a surprise boost in their industrial output as well as an increase in trade surplus for the month of February. The construction sector led the way for industrial production to go beyond forecast.
According to their federal statistics authority, Destatis, the country boosted production by 2.2 for February compared to January numbers. Financial services Factset only forecasted an increase of 0.3%.
The Economy Ministry in Berlin, said, “Manufacturing orders recovered after a sharp decline at the start of the year. Order intake was lower than in the very strong fourth quarter, which was characterized by bulk orders. However, the volume of orders, as well as the business climate in the manufacturing sector, rose, and a slight upturn in manufacturing is to be expected.”
In the previous months, it was cold weather that slowed down construction. According to figures, the output of investment goods went up by 1.1% and for consumption goods, an increase of 1.4%.
Meanwhile, Germany’s February trade surplus surged to 21 billion euros ($22 billion). According to the data, exports rose by 0.8% in February to 104.9 billion euros worth of exports while imports declined by 1.6% to fall to 83.8 billion euros. In January, Germany had a trade surplus of 18.5 billion euros.
Carsten Brzeski, chief economist at ING Bank, described the boost in industrial production as “whopping.” Brzerski said, “German industry finally returns as a growth engine. No, it’s not a spelling mistake. Today’s data suggest that industrial production could finally return as a growth engine for the German economy.”
Alexander Krueger, an economist at Bankhaus Lampe, said, “the increase in orders was important- otherwise concerns about production would definitely have been warranted.”
The industrial production report was given a day after Germany reported that German factory orders improved in February. All these strings of good news led to Citigroup raised the country’s estimate for its 1st quarter economic growth to 0.7%, up from 0.5%.
Andreas Rees, chief German economist at Unicredit, said, “All is set for brisk growth led by the resurgence in global trade and its positive impact on German industrial activity.”
U.S. President Donald Trump has repeatedly vowed to renegotiate trade practices with countries that have substantial trade surplus against America. The Commerce Department showed that in February, the U.S. trade deficit with Germany has fallen to its lowest level in more than four years at $3.9 billion.
U.S. economic adviser Peter Navarro has accused Germany of exploiting its “grossly undervalued” currency to boost its competitiveness.
Sophia Krietenbrink, an economist at Germany’s DIHK Chambers of Commerce, noted that Germany’s industrial sector seems insulated from the international political risks.
Brzeski said, “The Brexit negotiations and a possible further weakening of the pound sterling, protectionist measures from the Trump administration and negative growth surprises from China pose a clear risk to the German economy.”
Other recent economic data for Germany include falling unemployment, retail sales increasing, and services sector growing rapidly. However, engineering orders for February were flat because domestic orders lessened.