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 Following the sector's jump in January, the surprisingly small dip
gave analysts some relief after data on Tuesday showed industrial
orders unexpectedly dropped in February due to weaker foreign
demand, particularly from euro zone countries.
The global economic slowdown has also been causing concern for
Germany's traditionally export-reliant economy.
Industrial output edged down 0.5 percent in February on the month
after a revised 2.3 percent increase in January, data from the
Economy Ministry showed. This was well above the mid-range forecast
in a Reuters poll for a 1.8 percent decline.
"Looking at January and February together, the picture is looking
bright. Industrial production is pointing upward," Dekabank
economist Andreas Scheuerle said, adding the data pointed to growth
picking up to an estimated GDP rate of around 0.5 percent in the
first quarter.
"But nobody should take this as a sure-fire success for the rest of
the year. The problems on global sales markets are not solved yet,"
he added.
Capital Economics analyst Jonathan Loynes said February's figure
provided a very solid platform for the first quarter. Even if
production was to fall around 1 percent in March, this would still
leave a solid gain for the whole quarter, he noted.
"That, in turn, could potentially lift the quarterly rate of German
GDP growth from Q4's 0.3 percent to around 0.7 percent in Q1,"
Loynes added.
A breakdown of the February data showed construction firms posting
strong gains while the energy sector and factories producing
consumer and capital goods reported weaker output.
"Overall, the industrial sector got off to a relatively good start
in 2016 although seasonal factors led to shifts in production and
the construction sector benefited from the mild winter," the Economy
Ministry noted.
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The manufacturing and construction sectors are expected to post
solid gains in the first quarter, the ministry added.
The booming construction sector is currently one of the main growth
drivers in Germany. In the last three months of 2015, construction
investment and state spending were the two biggest growth
contributors while net foreign trade was a drag.
In the whole of 2015, strong private consumption and higher state
spending drove an economic expansion of 1.7 percent. But analysts
doubt that growth this year will surpass that pace.
The country's leading economic institutes will update their joint
growth forecast for 2016 on April 14 and the government is expected
to publish its own updated forecast on April 20.
(Additional reporting by Rene Wagner; Editing by Tom Heneghan)
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