Industrial output in Germany unexpectedly posted its biggest rise in almost a decade in January, raising hopes the country's sputtering economy will rebound strongly in the first quarter of this year.
Official data showed output rose by 3.1 per cent, flying in the face of recent forecasts that Germany's economic recovery is losing momentum. The seasonally adjusted monthly rise was the second in succession and the biggest since February 1995, according to Bundesbank data.
Even before the data was released, economists had said the start of 2005 would likely see a strong rise in production after industrial orders rose 7.6 per cent month-on-month in December, the biggest gain since German re-unification in 1990.
A breakdown of the January output data showed manufacturing output rose 3.8 per cent, the strongest monthly rise since August 1993. Construction output also rose by 0.7 per cent, but energy output declined by 2.8 per cent.
Dresdner Kleinwort Wasserstein economist Rainer Guntermann said that while the output data provided a welcome boost, the mid-term outlook was still full of uncertainties. "Today's figure hardly gives us any help - it is still difficult for German industry - the euro is strong, oil expensive and the world economy is weakening somewhat," he said.
Europe's biggest carmaker Volkswagen VOWG.DE> said recently the euro's surge against the dollar had wiped 800 million euros from its operating profit last year. Despite dipping from highs above $1.36 at the end of last year, the euro has risen again recently and was trading at around $1.335 this afternoon.