By Scott Kanowsky
Investing.com -- German industrial production grew by more than anticipated in February, according to data from the country's federal Statistical Office, adding to hopes that Europe's largest economy may be able to avoid a recession.
Factory output during the month increased by 2.0% from 3.7% in January, topping economists' estimates for a slight uptick of 0.1%. On a yearly basis, the figure inched up by 0.6%.
The statistics agency noted that the majority of Germany's economic sectors raised their production levels in February, with the automotive industry seeing its output in particular climb by a seasonally adjusted 7.6% month-on-month. Meanwhile, production in energy-intensive industries moved up by 1.9%, although it remains down by 12% year-on-year.
"German industry seems to have woken up from hibernation," analysts at ING wrote in a note following the release of the data on Thursday. "The strong rebound seems to be driven by the reopening of China, strong activity in the automotive sector and a more general ongoing reduction of backlogs."
The ING analysts added that the industrial data helps remove the risk of Germany slipping into a so-called technical recession, or two straight quarters of economic contraction.
On Wednesday, leading economic institutes in Germany predicted that price-adjusted gross domestic product would edge up by 0.3% in 2023 as easing supply bottlenecks and cheaper energy prices boost the country's all-important manufacturing sector. The study previously projected an annual decline in economic growth of -0.4%.
However, the ING analysts flagged that they were still cautious about the outlook for Germany, noting the potential knock-on effects of possible slowdown in the U.S. economy.
"It would not be the first time that the German (and the European) economy starts the year on a positive note, just to lose momentum over the course of the year," the ING analysts said.