(Bloomberg) -- German industrial production unexpectedly rose in February, led by the construction sector, reaffirming the strength of the country's economic outlook.
Output, adjusted for seasonal swings and inflation, gained 2.2 percent from January, when it rose a revised 2.2 percent, the Economy Ministry in Berlin said on Friday. The typically volatile measure compares with a median estimate for a 0.2 percent drop in a Bloomberg survey. Production was up 2.5 percent from a year earlier.
The data come a day after a report showed German factory orders recovered in February, led by a jump in domestic demand. Citigroup responded to the production numbers -- and an increase in exports in February -- by raising its estimate for first-quarter economic growth to 0.7 percent from 0.5 percent, which would be the strongest performance in a year.
“All is set for brisk growth led by the resurgence in global trade and its positive impact on German industrial activity,” said Andreas Rees, chief German economist at Unicredit in Frankfurt.
The economy expanded at the fastest pace in five years in 2016 and recent indicators have shown private-sector activity accelerating and unemployment at a record low. Even so, national elections, Brexit and uncertainty over U.S. trade policies could still pose risks for spending and investment in Europe's largest economy.
“Overall the output in the manufacturing sectors has done extremely well in the first quarter,” the ministry said in an e-mailed statement. Order numbers as well as sentiment indicators provide “confidence for economic activity in the first quarter.”
After cold weather held back construction in previous months, it surged almost 14 percent in February. Output of investment goods increased 1.1 percent and consumption goods rose 1.4 percent.
--With assistance from Andre Tartar and Kristian Siedenburg
To contact the reporters on this story: Carolynn Look in Frankfurt at clook4@bloomberg.net, Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net.
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jeff Black
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