German industrial production rises more than expected in February

Industrial production in Germany increased by 2.1% in February compared to the previous month, significantly surpassing the median forecast of 0.6%. This follows a similarly strong upwardly revised increase of 1.3% in the previous month.

The construction industry saw a notable surge in production, with a 7.9% increase compared to the previous month. This has contributed significantly to the overall growth in industrial production.

Despite the overall growth, the energy-production sector experienced a decline of 6.5% compared to the previous month, reflecting ongoing challenges in this area.

Manufacturing production, excluding energy and construction, also saw positive growth, up 1.9% from January. This was driven by increases of 5.7% in the automotive industry and 4.6% in the chemical industry.

Despite the recent improvements, German industrial production remains approximately 8% below its pre-pandemic level. Economists view the current uptick as more cyclical rather than structural in nature.

While the latest data indicate a positive trend, economists remain cautiously optimistic about the prospects for the German industrial sector. They note that the recent improvements do not yet signal the beginning of a significant recovery.

Overall, the strong performance in German industrial production in February, particularly in the construction and manufacturing sectors, provides some optimism for the economy. However, challenges such as weak demand and reduced competitiveness are expected to continue posing headwinds for the sector throughout 2024.