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Germany Industry May 2018

Germany: Industrial production data surprises on the upside in May on the back of a strong construction sector

Industrial production data for May provided some positive news following a stream of largely lackluster economic data so far this year. In May, industrial output grew 2.6% over the prior month in seasonally-, price- and working-day adjusted terms, rebounding from April’s revised 1.3% contraction (previously reported: -1.0% month-on-month) and easily overshooting market expectations of a softer 0.3% expansion. Moreover, May’s reading was the highest since November of last year.

The print was chiefly driven by rebounds in the manufacturing and energy sectors. The manufacturing sector recovered from a 1.7% drop in the prior month to log a robust 2.7% expansion in May, whereas output in the energy sector clocked a 0.8% increase after contracting sharply in the prior month (April: -5.3% mom). Meanwhile, growth in the construction sector sped up from 1.1% in April to 3.1% in May, suggesting that the sector was an important pillar of growth in the first two months of the second quarter. On a less positive note, mining output dropped 0.8% in the month, contrasting April’s solid 1.3% increase.

On an annual basis, industrial output growth more than doubled compared to the prior month. In May, production increased 3.1% over a year ago, significantly picking up pace from April’s revised 1.4% figure (previously reported: 2.0% year-on-year). Annual average growth in industrial production inched down, however, from 3.9% in April (previously reported: +4.0%) to 3.8% in May.

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