Following January strong increase (+0.7% m/m) industrial output was up 0.4% m/m in January. Manufacturing production rose 0.5%, while output in energy and construction declined. Today’s data bode well for a sharp GDP increase in Q1.
- In February, industrial production increased by 0.4% m/m, up for the fourth consecutive month following January marked rise (+0.7%). On a year-on-year basis, it was up +4.8% and its underlying trend accelerated from 1.6% in January to +1.9% q/q in February. Assuming zero growth in March, it should be up 1.8% in Q1 thus markedly accelerating from Q4 13 (+0.5%).
- Industrial output increased in the manufacturing sector (+0.5% m/m) while it was roughly unchanged in construction (-0.1% m/m) and declined in the energy sector (-0.9% m/m). Amongst manufacturing branches, capital goods output, which accounts for a third of industrial output and is a good leading indicator of capital investment, was roughly unchanged (-0.2%). Manufacturing underlying trend slightly accelerated from 2.0% q/q in January to 2.1% in February. Assuming zero growth in March, it should be up 2.1% in Q1 vs. +1.0% in Q4 13
Manufacturing orders released last Friday increased by 0.6% m/m in February (up for the fourth consecutive month). This increase was mainly due to domestic orders, which were up 1.2% m/m while foreign orders were roughly unchanged. All in all manufacturing orders underlying trend remains upward orientated, though frankly decelerating (+0.8% q/q, after 1.7% in January).
- Today’s data bode well for a sharp GDP increase in Q1 (above our current forecast of around 0.5% q/q). However, economic growth could decelerate as soon as Q2 as perspectives are less rosy. Indeed, the crisis of the emerging economies and the events in Crimea are impacting the confidence of German firms, according to recent surveys, but nothing alarming yet.
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