German Economy Ministry said on Tuesday that industrial activity in Germany was expected to recover moderately in the first quarter this year as business sentiment became overcast despite a rebound of industrial output in January.
In seasonally and working day adjusted terms, German industrial production rose monthly by 3.3 percent in January, following a decrease of 0.3 percent in December last year, data from German federal statistics office Destatis showed on Tuesday.
It was the strongest increase since September 2009 and followed drops at the end of 2015, but economists remained cautious. "The manufacturing sector had a very good start in the new year after a weak patch in the second half of 2015," said German Economy Ministry in a statement.
"Nevertheless, sentiment indicators have deteriorated somewhat. Overall, a moderate recovery of industrial activity in the first quarter is expected," it added. Experts at Capital Economics, a London-based think tank, said the production jump in January was a "normal lag" which corresponded to an increase of new orders two months ago when domestic demand made the most contribution to new contracts.
Since then, however, orders for "Made in Germany" products have declined. In January, new orders fell by 0.1 percent, following a drop of 0.2 percent in December. According to Destatis, domestic demand decreased by 1.6 percent in January, while new orders from outside the euro zone went down by 2.7 percent.
Dirk Schlotboeller, an economist at the Association of German Chambers of Commerce and Industry (DIHK), told local media on Monday that despite an euro zone recovery stimulated by falling oil prices, a decline in domestic orders was "the real disappointment".
A recent survey by Munich-based Ifo institute found that confidence of German companies on the outlook of the coming six months deteriorated for the third straight month in February. The gloomy mood was noticed especially in the manufacturing sector, Germany's backbone.
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