German exports bolster economy as industrial output drops

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Published May 9, 2017

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Frankfurt - German exports rose for a third month in March in a sign

Europe’s largest economy is benefiting from a pickup in global trade as

industrial production dropped less than economists predicted.

Exports rose 0.4 percent from February, the Federal

Statistics Office said on Tuesday. While an Economy Ministry report showed

industrial output dropped 0.4 percent compared with a median estimate for a 0.7

percent drop in a Bloomberg survey that still marked a 1.1 percent gain for the

first quarter.

“Despite the small drop in March, industrial production

should have returned as a growth driver for the German economy,” said Carsten

Brzeski, chief economist at ING Diba AG in Frankfurt.

“In fact, the construction sector alone has been one powerful source of

economic growth.”

The data come a day after a report showed German factory

orders expanded for a second month in March, bolstered by demand from the

19-nation euro area. The Bundesbank has labelled sentiment in manufacturing

“extraordinarily optimistic” amid favourable export prospects, predicting an

acceleration of growth in the first quarter.

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Economists forecast Europe’s

largest economy grew 0.6 percent in the three months through March. The Federal

Statistics Office will release those figures on Friday.

“Momentum in the industrial sector revived somewhat in the

first quarter,” the ministry said in an emailed statement. “That holds true for

both manufacturing and construction. Orders and business-climate indicators

signal a continuation of the positive trend.”

Output was up 1.1 percent in the January-March period,

driven by a 4.7 percent surge in construction. In March, manufacturing dropped

0.5 percent. Investment-goods production fell 1.2 percent, while energy output

slumped 2.5 percent. The trade balance widened to 25.4 billion Euros ($27.7

billion) from 20 billion Euros.

BLOOMBERG

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