German Industry Output Growth Beat Forecasts in May
German industrial output jumped in May, rising twice as fast as economists predicted thanks mainly to higher production of capital goods along with a downward revision to April's figures, data showed on Thursday.
The economy ministry said production in the manufacturing, construction and energy sectors increased by 1.2% compared to April, when it fell by 0.8%, beating expectations from a Reuters survey for a rise of 0.6%.
May's figures showed capital goods output, an indicator for investment demand in the broader economy, grew by 2.5% as firms looked to build up their capacity and boost productivity.
"The pace of expansion could ease somewhat in the coming months due to a more moderate increase in new orders," the ministry said, though the upside trend remained intact.
Continued booming industrial activity in Germany would support the case for more rate hikes made by the European Central Bank's more hawkish policymakers.
The ECB is virtually certain to hike rates on Thursday by a quarter of a point to 1.5%, with markets listening out for clues about the rate outlook for the remainder of the year.
German manufacturing orders rose nearly 2% in May, data showed on Wednesday, driven by higher domestic demand for big-ticket items even as foreign orders dropped, signaling a slowdown in the global economy would cool Germany's export-led growth.
Thursday's strong May output figures were offset to a degree by April's downward revision. Stripped of this effect, May would have shown growth of 1% month-on-month.
The manufacturing output component of the industrial production data, which likewise showed a 1.2% rise in May, is a key indicator for investors since it accounts alone for almost a fifth of the German economy.
Surprises can often lead to growth forecast revisions by economists, affecting currency, debt and equity markets.
Earlier, data from the UK showed manufacturing output in Britain rose at its fastest pace in over a year in May but could not fully recoup losses from a Royal Wedding-related drop in April.
