German industrial output surges in June

German industrial production saw an unexpectedly strong rebound in June driven by all sectors, official data showed Wednesday, fanning hopes for a second-quarter pick-up in growth for Europe's biggest economy. The figure for June represented a 2.4-percent increase from the outcome the previous month which was revised slightly upwards to show a 0.8-percent drop, according to initial data from the economy ministry. The seasonally, price and calendar-adjusted rise in industrial production widely overshot expectations of economists polled by Dow Jones Newswires, who had reckoned on a June increase of 0.3 percent. Economists cheered the result, saying it pointed to healthy growth in Germany's gross domestic product for the April-June period, ahead of the publication of a provisional estimate due on August 14. "June has been a strong month for manufacturers in Europe with confidence turning up and output rising. Germany's manufacturers joined the party," said Christian Schulz of Berenberg bank. The high jump came on the heels of May when an above-average number of so-called bridging days, when staff extend their time off by taking an extra day or two off around a bank holiday, curbed industrial production. "All in all industrial production seems however to have overcome its phase of weakness," the ministry said in a statement. "Current business climate indicators point to progress in the positive development of production," it added. The construction sector, which had been hit by a long and severe winter, saw production grow by 1.6 percent in June, while for manufacturing, the rise was 2.2 percent, it said. Taken over a two-month period for May and June, industrial production grew 1.3 percent compared to March-April. "All in all, an encouraging report that supports the idea that Germany remained the main growing economy in Q2 in the eurozone despite some signs of sluggishness during the spring months," commented Annalisa Piazza of Newedge Strategy. Germany's export-driven economy shrank in the last quarter of 2012 amid the eurozone debt and recession crisis but has since gradually rebounded, booking 0.1 percent growth in the first quarter. The International Monetary Fund said Tuesday it was maintaining its outlook for 0.3 percent GDP growth this year in Germany and 1.3 percent in 2014, but said Berlin would have to rethink its tax-and-spend plans if growth falls short. The results come a day after the economy ministry said German industrial orders, a key measure of demand for goods at home and abroad, rose 3.8 percent in June from the previous month, mainly due to big-ticket orders, including at the Paris air show. "June's German industrial production data point to healthy quarterly GDP growth in Q2 and the sector could continue to build steam in the near term," said Ben May, an economist at Capital Economics. Berenberg's Schulz agreed that the output jump bolstered hopes for German growth but added that other data, including retail sales, indicated some caution. "Stabilisation in the eurozone and healthy import growth in the US and other developed export markets are keeping Germany's export locomotive on its rails, despite the wobbles in China," he said, also pointing to "robust" domestic demand. "Growth may recede a little over the coming quarters, but Germany is firmly back to expansion territory, thanks largely to the ECB's intervention to end the financial tensions last summer," he said.