Surge in German factory output points to strong GDP growth in Q3

Surge in German factory output points to strong GDP growth in Q3”

Germany's industrial production rebounded in August, data from Destatis revealed Monday.

Total output rose by 2.6% on the month, according to the Ministry of Finance, easily outstripping forecasts for growth of 0.8%.

Production of capital goods rose 4.8 percent and that of consumer goods gained 2.1 percent.

Analysts had forecast output growth of just over 0.8 percent in August after a marginal contraction of 0.1 percent the previous month. Energy output also rose while construction activity fell.

The German economy ministry said production in the manufacturing sector has shown a more vigorous upward trend.

On a yearly basis, growth in industrial production improved unexpectedly to 4.7 percent from 4.2 percent in July.

The higher-than-expected growth follows the release of manufacturing orders data for August on Friday that showed a surge that more than compensated for July's unexpected decline. "In combination with weakness in retail sales, this suggests that German GDP growth slowed slightly last quarter, but we are not particularly anxious given the impressive momentum in the first six months of the year".

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.

Other risks include a slowdown of the British economy due to the continuing Brexit uncertainty and China's transition from an important export destination to a serious competitor, he added.

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