German industrial output unexpectedly rose in February, a second successive gain.
Preliminary Economy Ministry data showed output rose by 0.9 per cent month-on-month in seasonally adjusted terms, boosted by gains in manufacturing, energy and construction.
Analysts had been expecting a 0.5 per cent drop. January's monthly output change was revised down to a gain of 0.9 per cent from an originally reported rise of 1.9 per cent.
Germany raised value-added tax (VAT) by three percentage points on January 1, and although consumer spending has taken a knock, sentiment among firms and investors has been robust.
The strength of German output has likely helped offset the negative impact of the VAT hike on growth in the first quarter, said Lehman Brothers economist Sandra Petcov.
"Our first quarter GDP growth forecast before the output data was 0.1 per cent so there are perhaps some upside risks around this but not enormously," she said.
A breakdown of the numbers showed manufacturing production rose by 0.8 per cent on the month, with construction output up 0.9 per cent. Energy production increased by 2.4 per cent.
German manufacturers have been at the forefront of the country's increased international competitiveness in recent years, which has been characterised by marked wage restraint.