Industrial production in Germany fell by less than expected in March following two strong months while exports and imports both hit record-highs in March, data showed yesterday, suggesting Europe’s biggest economy picked up steam in the first quarter.
In another sign for a continued upswing and improved labour demand, job vacancies hit an all-time high in the first three months of 2017.
The overall robust readouts are the latest in a batch of solid economic figures that are likely to help Chancellor Angela Merkel burnish her economic credentials ahead of a September 24 federal election, when she will seek a fourth term.
Her gap with the main opposition Social Democrats has already been widening. The economic numbers also underline the strength of the German economy compared with its peers.
Foreign Minister Sigmar Gabriel, a Social Democrat in Merkel’s coalition, has urged her conservatives to adopt a less rigid stance in fiscal policy towards France after the election of the pro-reform centrist Emmanuel Macron as French President.
It is astonishing how the German economy is defying global risks
“German exports had an impressive first quarter,” BGA trade association head Anton Boerner said, adding that business with other European Union countries and overseas markets such as China and the United States was flourishing.
“It is astonishing how the German economy is defying global risks, whether politically or economically,” Boerner added.
Germany’s quarterly economic growth, to be released on Friday, is now expected to pick up to 0.6 per cent in the first quarter from 0.4 per cent in the final three months of last year.
Industrial output edged down by 0.4 per cent on the month in March, beating the consensus forecast for a drop of 0.6 per cent, data from the Economy Ministry showed yesterday.
In the first quarter as a whole, industrial production increased by 1.4 per cent on the quarter.
The Economy Ministry said the industrial upswing had gained momentum. “Industrial orders and sentiment indicators suggest a continuation of this positive trend,” it added.
While construction remains a powerful source of growth, industry output and investments are set to finally catch up with the rest of the economy, ING economist Carsten Brzeski said.
Separate data released from the Federal Statistics Office showed that seasonally adjusted exports rose by 0.4 per cent on the month to hit a record high of €105.4 billion. Imports jumped by 2.4 per cent also to hit the highest value recorded in a month of €85.8 billion. This narrowed the seasonally adjusted trade surplus to €19.6 billion.
“Germany is clearly benefiting at the moment from the revival of the global economy,” Sal. Oppenheim economist Ulrike Kastens said, adding that German firms still seemed to offer the right products which are in demand all over the world. The good trade figures will likely increase the pressure on Germany to reduce its high trade surplus. But higher public investment, as demanded by France and others, will not solve the problem alone, Kastens said.