German February industrial rises on construction surge

FILE PHOTO: A steel worker of Germany's industrial conglomerate ThyssenKrupp AG works near a blast furnace at Germany's largest steel factory in Duisburg
FILE PHOTO: A steel worker of Germany’s industrial conglomerate ThyssenKrupp AG wears protection helmet as he works near a blast furnace at Germany’s largest steel factory in Duisburg, Germany, January 28, 2019. REUTERS/Wolfgang Rattay/File Photo

April 5, 2019

BERLIN (Reuters) – German industrial output rose by 0.7 percent in February as mild weather helped a surge in construction activity but manufacturing production dipped, giving little hope to Europe’s largest economy after a run of negative news.

Germany is suffering from trade friction and Brexit angst after narrowly avoiding recession last year. Leading economic institutes slashed their forecasts for 2019 growth on Thursday and warned a long-term upswing had come to an end.

The rise in output exceeded expectations for a 0.5 percent increase on the month. January’s reading was revised up to show no change from a previously reported contraction of 0.8 percent, Statistics Office figures showed.

“The industrial sector is expected to remain subdued given the weak development in orders and the gloomier business climate,” the Economy Ministry said in a statement.

“The construction sector remains in a boom. The relatively mild weather contributed to the good result in February.”

Industrial orders in Germany fell by the biggest margin in more than two years in February, slumping 4.2 percent, data showed on Thursday.

The overall gain in industrial output was boosted by a 6.8 percent surge in construction. Manufacturing output declined by 0.2 percent in February.

“A warm thank you to the construction sector. More generally speaking, German industry remains an international reason for concern,” said ING economist Carsten Brzeski. “Brexit woes and the global slowdown have a stranglehold over German industry.”

On Thursday, Germany’s leading economic institutes slashed their forecasts for 2019 growth by more than half and warned that the economy could slow much more if Britain quits the European Union without an agreement.

Germany is in its 10th year of economic expansion, but narrowly skirted a recession at the end of last year and posted its weakest growth in five years in 2018. Its export-orientated economy is being slowed by the trade and Brexit headwinds.

Chancellor Angela Merkel has repeatedly said she will “fight until the last hour” for an orderly Brexit.

(Writing by Paul Carrel; Editing by Tassilo Hummel and Raissa Kasolowsky)

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