Berlin - German industrial production surged by a more-than-
forecast 3.7 per cent in May to report its biggest rise in 16 years,
the economics ministry said Wednesday, adding to hopes of a pickup in
Europe's biggest economy by the end of the year.
Economists had forecast the data would show output climbing by
just 0.5 per cent with the increase coming amid signs that the global
recession is starting to loosen its grip on Germany.
'The industrial sector has passed its low point,' said Commerzbank
economist Ralph Solveen.
Spearheaded by rising car production, the sharp increase in May
production comes in the wake of months of dramatically falling
production in Germany as the nation faced up to its economic downturn
in more than sixty years.
The release of the latest output data followed the publication of
figures Tuesday showing factory orders in the nation surging by 4.4
per cent in May.
Figures to be released Thursday by Germany's statistics office are
forecast to show German exports rising by a seasonally adjusted 1.5
per cent in May, raising the prospects that the world economic demand
is gaining ground.
A 1.5-per-cent increase would help to compensate for the hefty
4.8-per-cent drop in German exports in April. German imports are
forecast to rise by 0.8 per cent in May, compared to a 5.8-per-cent
fall in April.
Many economists believe as the world's leading export nation
Germany could enjoy a rather speedy recovery from recession on the
back of a sustained upswing in global trade.
Key forward-looking economic sentiment indicators have already
pointed to the slowdown in the German economy starting to bottom out
with business confidence in the nation rising for the third
consecutive month in June.
But while manufacturing output rose by 5.1 per cent in May and
output of investment goods jumped by 8.3 per cent, Wednesday's
industrial production showed the construction industry slumped by 3.2
per cent.
This is despite the boost to infrastructure projects resulting
from Chancellor Angela Merkel government's more than 80-billion-euro
(111.4-billion-dollar) stimulus plans.
Moreover, announcing the latest output data, the Ministry of
Economics and Technology revised down the April fall in output to 2.6
per cent compared to a previously estimated drop of 1.9 per cent.
May industrial output has tumbled by about 18 per cent compared to
the same month in 2008, consequently underscoring the depths of the
German recession.
This, economists said, is likely to mean that the German economy
once again contracted during the second quarter after it chalked up a
3.8-per-cent slump during the first three months of the year.
Indeed, the German economy is tipped to shrink by 6 per cent plus
this year as it reels from the recession which took hold in the last
months of 2008.
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