Published: Tue, October 10, 2017
Worldwide | By Isabel Fisher

Germany's August factory output surges

Germany's August factory output surges

German industrial output, a key indicator of economic health, grew faster than expected in August, data showed on Monday, putting Europe's biggest economy on course for a strong performance this year.

Imports also rose for a second month running, up 1.2 percent in August after 2.4 percent growth in July.

The figures suggest that the German economy, the euro zone's growth engine, is set for a solid expansion in the third quarter despite uncertainties about the make-up of the next government following national elections last month.

"The biggest risks for the German economy and the export sector come from the outside", said Carsten Brzeski, an economist at ING. "In combination with weakness in retail sales, this suggests that German GDP growth slowed slightly last quarter, but we are not particularly anxious given the impressive momentum in the first six months of the year".

Both hard economic data and sentiment surveys have pointed to strong German growth in the July-September period and a solid expansion for the whole of 2017.

"Geopolitical risks, a slowdown of the USA or United Kingdom economy and a deflating eu (ro) phoria could dent the strong growth momentum", the economist said.

The rise in industrial orders has been attributed to strong demand from outside the eurozone and is likely to have fuelled a strong growth in German GDP (Gross Domestic Product) in the third quarter. It easily beat the Reuters forecast for a 0.7 percent rise, surpassing even the most optimistic estimate.

In direct terms, Germany exported goods to the value of 103.1 billion euros ($121.5 billion) and imported to the tune of 83 billion euros in the month of August.

In August, Germany exported goods worth 58.6 billion euros (69.03 billion dollars) to European Union countries while importing goods worth 53.8 billion euros (63.38 billion dollars) from them.

Germany's wider current account surplus, which measures the flow of goods, services and investments, fell to 17.8 billion euros after an upwardly revised reading of 19.6 billion euros in July, unadjusted data showed.

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