German Output Increases In March

By: DailyForex.com

The German economy is the largest within the Eurozone and the wider European Union and therefore German economic data is closely scrutinised as a portent for the fortunes of the wider EU. Germany has one of the lowest levels of unemployment within the EU (together with Austria) at 6.9% of its workforce, or 2.9 million people idle.

The German economy contracted by 0.6% in Q4 2012, so a second contraction when the Q1 2013 data is released would mean that the German economy has fallen into recession – analysts seem optimistic that this won’t happen and a return to growth of 0.3% is forecast.

The economic doves will have been heartened by the latest German industrial output figures for March which point to an unexpectedly strong growth of 1.2% over the February mark. Coupled with good data for new factory orders, a few rays of optimism seem to have broken through. The industrial output figure measures productivity in the manufacturing, mining, gas and electricity generation sectors of the economy. The industrial output figure for February was revised upwards to 0.6%. The figure for the current quarter is 0.2% higher than in Q4 2012 which adds to optimism that the German economy will have expanded when the Q1 2013 figures become available.

Economic indicators have been mixed, to say the least, with unemployment rising latterly and business sentiment faltering
because of on-going concerns over the sovereign debt crisis in Europe and slowing growth in China. However, Chinese output has improved recently and the latest sovereign debt storm in Cyprus has abated; for the time being, at least.

The glowing embers of optimism over renewed growth in Europe’s powerhouse economy have pushed the Xetra Dax index over the 8000 point mark to new record highs over the past few trading sessions.