Published : 2 years ago, on 06/04/2023

BERLIN (Reuters) -German industrial production rose significantly more than expected in February due in part to vehicle manufacturing, increasing 2.0% on the previous month, the federal statistical office said on Thursday.

In a Reuters poll, analysts had pointed to a slight increase of 0.1%.

The statistics office also revised the figure for January to a 3.7% increase, up from 3.5%. With the revision, the adjusted index of production since December 2022 rose by 5.8%, which more than compensated for the significant decline of 2.4% in December.

“German industry seems to have woken up from hibernation,” said Carsten Brzeski, global head of macro at ING. “Despite the strong rebound, industrial production is still slightly below its pre-pandemic level.”

Industrial output is expected to increase further in the coming months.

“A high backlog of orders, lower energy prices and easing supply constraints should continue to support production,” said Franziska Palmas, senior Europe economist at Capital Economics.

Pantheon Macroeconomics forecasts that industrial production will post a 3.0% quarter-on-quarter expansion in the first quarter, comfortably reversing the 0.5% decline in the fourth quarter.

Year-on-year, industrial production rose 0.6% in February.

Production expanded in most economic sectors in February but manufacturing of motor vehicles, Germany’s largest industrial sector, accounted for a particularly large share of the increase, posting a 7.6% increase month-on-month.

(Reporting by Linda Pasquini and Maria Martinez; Editing by Friederike Heine and Hugh Lawson)