German industrial output rebounds in January

Germany’s industrial production rebounded in January, official data published Wednesday showed, prompting cautious optimism that Europe’s biggest economy might be able to dodge a recession.

Output rose 3.5 percent on the previous month, after declining by 2.4 percent in December, federal statistics agency Destatis said.

The Economy Ministry voiced ‘cautious’ optimism about the outlook as the easing of supply woes and strong order books meant that the “economic slowdown at the beginning of the year will be moderate”.

Besides energy and construction works, industrial output rose 1.9 percent from December.

Huge disparities were seen in different sectors.

Electronic equipment manufacturers and chemical production pulled up the indicator with growth of 7.1 percent and 9.8 percent, respectively.

But car and automobile components production as well as pharmaceutical manufacturing fell by 5.2 percent and 12.9 percent, respectively. Both are key pillars of the German industry.

Compared to a year ago, industrial output fell by 0.9 percent.

The overall data “could put in question the scenario of a winter recession that we had assumed until now,” said economist Jens-Oliver Niklasch of public sector bank LBBW.

ING head of macroeconomics Carsten Brzeski said the data “brings some welcome relief, but is no reason to cheer”.

“It is mainly a correction of the December plunge,” he said, noting that January retail sales were continuing their downward trend from last year.

“While industry could become a mild growth driver in the first quarter, private consumption looks set to be a drag,” he warned.