Growth in German industrial output beat forecasts in January to underpin hopes the upswing has not been severely disrupted by a rise in sales tax this year.
Preliminary figures released by the Economy Ministry today showed output rose 1.9 per cent on the month in January in seasonally adjusted terms, boosted by a record jump in manufacturing output. The increase was the third in a row.
The ministry said the figures suggested a three percentage point increase in value added tax (VAT) on January 1st had not had as severe an impact on the economy as many had feared.
The Reuters consensus forecast was for a 0.5 per cent gain, with no economist tipping a rise of more than 1.2 per cent.
But as manufacturing orders unexpectedly fell in January, analysts said output could easily cool in coming months.
Germany enjoyed its strongest growth in six years in 2006, and industry surveys show the mood in the corporate sector remains upbeat, with new hiring and investment set to rise.
The economy has been led by a strong export performance which analysts say has profited from marked wage restraint.