The Wall Street Journal reports,"German industrial output increased faster than expected in February, its fourth increase in a row, suggesting Europe's largest economy expanded at a robust pace during the first quarter with an annualized rate approaching 3%".
Industrial output expanded 0.4% on the month in adjusted terms in February, Germany's statistics office said Monday, beating economists' expectations of a 0.2% monthly rise. The increased output follows unexpectedly strong manufacturing orders in February.
The influx of data points to a strong first quarter for Germany's economy, which has benefited from a very mild winter that has lifted construction output. For that reason, Germany's central bank said last month the country should see a "substantial boost" to economic growth.
Barclays on Monday raised its estimate for Germany's first-quarter gross domestic product growth to 0.7% on a quarterly basis from 0.5%, in view of stronger than expected industrial production, as well as healthy retail sales figures during the first two months of the year. That implies an annualized growth rate of around 2.8%, nearly double the fourth quarter's pace of 1.5% growth.
In addition, consumer confidence remains at a seven-year high, as optimism about the economy and a stable job market have helped boost economic expectations for Germans. February retail sales shot up 1.3% from the previous month, after increasing 1.7% in January, data last month showed.
"All in all, today's numbers confirm once again that a strong growth performance, at least in the first quarter, is in the making. The German economy is powering ahead," said Carsten Brzeski, an economist with ING Bank. Mr. Brzeski noted that despite a 0.1% decline on the month in February, the construction sector is "booming," as evidenced by the sector's 1.6% average growth over the past four months.
Germany's performance is critical for the euro zone as a whole. Its economy accounts for nearly one-third of GDP in the 18-member euro bloc.
