German industrial production returns to growth

BERLIN (AP) ? Industrial production in Germany returned to growth in January after slowing sharply the previous month, underlining hopes that Europe's biggest economy will avoid slipping into recession.

Production was up 1.6 percent in January compared with the previous month, the Economy Ministry said Thursday ? a stronger increase than economists' forecast of 1.1 percent. In December, orders were down 2.6 percent, a figure that was revised Thursday from the initial reading of 2.9 percent.

The German economy shrank slightly in last year's fourth quarter but economists are optimistic that it will avoid two consecutive quarter-on-quarter contractions ? which would put it in recession.

Thursday's figures provided "first evidence of a tender rebound of the German economy," said Carsten Brzeski, an economist at ING in Brussels.

A technical recession "can still not entirely be ruled out" and a cold snap in February likely pushed down activity in the construction sector, he added.

However, "once the February freeze is behind, there are still enough reasons to expect a rebound of the German economy."

Over the past two years, Germany has outperformed debt-troubled countries elsewhere in the 17-nation eurozone, growing by a strong 3 percent overall in 2011. The government expects more modest growth of 0.7 percent this year.

In year-on-year terms, industrial production was up 1.8 percent in January, following a 1.3 percent increase in December.

The Economy Ministry cautioned that, in view of "restrained" industrial orders, production data are likely to remain subdued in the near future ? though it said improving overall indicators, such as rising business confidence, point to a gradual improvement.

On Wednesday, the ministry said industrial orders in January unexpectedly dropped 2.7 percent compared with the previous month due to an unusually low number of big-ticket orders and a sharp drop in demand from abroad.

That followed a 1.6 percent rise in December.

A separate report from the Federal Statistical Office showed that the number of business bankruptcies in Germany declined by 5.9 percent in 2011.

A total of 30,099 companies applied for bankruptcy protection from creditors last year. In December, 2,493 firms went under ? a comparatively small decline of 1.6 percent compared with a year earlier.

Source: http://news.yahoo.com/german-industrial-production-returns-growth-111132148.html

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