2018.07.0608:01:00UTC+00Germany's Industrial Output Recovers At Faster Than Expected Pace

Germany's industrial production recovered notably in May after a weaker start to the year, official data showed Friday.

Industrial output grew 2.6 percent month-on-month in May, reversing a revised 1.3 percent drop in April, Destatis reported. This was the biggest expansion in six months. Output was forecast to grow marginally by 0.3 percent.

Excluding energy and construction, industrial production climbed 2.7 percent. Energy production logged a monthly growth of 0.8 percent in May and construction increased 3.1 percent.

Production of capital goods moved up 0.9 percent, while that of consumer goods surged 6.5 percent. At the same time, intermediate goods output showed an increase of 3 percent.

On a yearly basis, industrial production advanced by a more-than-expected 3.1 percent after rising 1.4 percent a month ago. Economists had expected 1.5 percent increase for May.

The economy ministry said the robust order intake in May indicates that the economy in the manufacturing sector remains moderately upwards.

May's industrial data add to the evidence that the weakness in the sector earlier in the year was at least partly down to temporary factors, Jack Allen, an economist at Capital Economics, said.

Overall, the German economy has clearly shifted down a gear this year, but growth is likely to remain fairly strong.

The International Monetary Fund forecast Germany to grow 2.2 percent in 2018 and 2.1 percent next year. Although the outlook is for the expansion to continue in the near term, it it set to slow markedly over the medium to long term, reflecting unfavorable demographics and productivity trends.