German recovery gains momentum as industrial output rises

Frankfurt (AFP) - Recovery of the German economy, Europe's biggest, appears to be regaining momentum as industrial production rose more than expected in November, official data showed on Thursday.

Industrial output rose by 1.9 percent in November, offsetting a 1.2-percent drop seen in October, the economy ministry calculated in preliminary data.

Analysts had been expecting an increase of about 1.5 percent for November.

While economic activity was down by 3.3 percent and 1.7 percent respectively in the energy and construction sectors, manufacturing output jumped by 3.1 percent, the ministry said.

Nevertheless, taking October and November combined to iron out short-term fluctuations, industrial output contracted by 0.7 percent compared with the preceding two months, the ministry calculated.

"German industrial production returned as an important growth engine in November," said ING DiBa chief economist Carsten Brzeski.

"After a disappointing start of the fourth quarter, today's industrial production data add further evidence that the German economy has regained momentum towards the end of last year," the expert said.

"Looking ahead, the acceleration of the economy should continue. All in all, this week's data do not only point to a strong end-year finish of the German economy but also bode well for growth in 2014."

Already on Wednesday, factory orders data had come in better than expected.

But Natixis economist Johannes Gareis warned against being unduly optimistic.

"Due to the low starting point of Germany's mighty industrial sector, trees won't grow into the sky as regards the German overall growth in the fourth quarter," he said.

Berenberg Bank economist Christian Schulz was similarly cautious.

"Despite the improvement, the overall industrial output data still does not indicate a strong expansion in the fourth quarter," he said.

"Average output in the first two months of the quarter was 0.2 percent below the third-quarter average."

BayernLB economist Stefan Kipar was confident that the "positive underlying trend ... looks set to continue in the coming months."

Furthermore, confidence surveys "continue to point to upward potential," he said.

"Recovery will continue throughout the winter. Growth won't be euphoric. But as the crisis countries continue to put the recession behind then, we'll see the first growth impulses coming from abroad as well," Kipar said.