German economy ends 2017 “with a bang” as industrial output surges

BERLIN (Reuters): Germany’s industrial production and its exports rose more than expected in November, pointing to continued rising growth in Europe’s largest economy in 2018.

Industrial output jumped by 3.4% on the month, the strongest increase since September 2009, data from the Federal Statistics Office showed on Tuesday, overshooting a 1.8% forecast in a Reuters poll.

November seasonally adjusted exports rose by 4.1% on the month and domestic demand pushed up imports by 2.3%. Both figures beat Reuters forecasts and widened the trade surplus to 22.3 billion euros ($26.61 billion) from 19.9 billion euros in October.

“November’s surge in German industrial production is a welcome confirmation that the economy approached the end of 2017 in very good health and the surveys point to further strength to come,” Jennifer McKeown of Capital Economics wrote in a note.

The figures and buoyant business sentiments suggest “that the German economy ended 2017 with a bang after the third-quarter’s impressive 0.8% expansion,” she added.

The economy has continued to surge despite political deadlock as Chancellor Angela Merkel has failed to form a new coalition government since a September election.

The rise in output confirmed assumptions by economists that a fall of 1.2% in October was the result of limited factors, namely two public holidays. A breakdown of the output data showed the main drivers were capital and consumer goods spending as well as construction.

The Statistics Office will on Thursday publish full-year gross domestic product figures for 2017 which is forecast at 2.4% growth.

“German GDP looks set to have risen by slightly more than our above-consensus forecast of 2.5% in 2017 and we expect a similarly strong pace of growth this year,” said McKeown.