German factory output, exports up but tariffs loom

FRANKFURT: German industrial production jumped more than expected in March while exports also rose, data showed Thursday, a boost for Europe’s biggest economy even as US tariffs cloud the outlook.

Factory output rose 3.0 percent from the previous month, according to preliminary data from federal statistics agency Destatis, after having fallen sharply in February.

March’s rise, driven by sectors including automotive and pharmaceutical, was better than a 0.75 percent increase expected by analysts surveyed by financial data firm FactSet.

Exports were up 1.1 percent from the previous month, boosted by higher shipments to the United States ahead of sweeping tariffs being imposed, in line with forecasts.

Capital Economics senior Europe economist Franziska Palmas said the rise in industrial production highlighted that “conditions in the sector have stabilised in recent months”.

But she cautioned that some of the strength in March was likely due to companies rushing to stock up on goods before April’s “Liberation Day” tariffs in the United States kicked in.

“And with the hit from US tariffs likely to be felt before long, and any support from the new government still some months away, we think a further improvement is unlikely,” she said.

The German economy has shrunk for the past two years due to a manufacturing slump, weak export demand and high energy costs, and there are fears US trade policy will push it into a third year of recession.

Exports rose to 133.2 billion euros ($150.5 billion) in March, according to Destatis.

Germany imported 112.1 billion euros of goods in March, down 1.4 percent on a month earlier, with its trade surplus coming in at 21.1 billion euros.