

Market Analysis
German industrial production saw a consecutive monthly increase, offering a glimmer of hope for Europe's largest economy to emerge from a potential shallow recession it may have experienced over the past six months.
In February, industrial production rose by 2.1%, driven primarily by growth in the construction sector, according to the statistics office's report on Monday. This surpassed the expectations of economists surveyed by Bloomberg.
However, despite this uptick, overall production remains significantly below pre-pandemic levels, reflecting the challenges faced by Germany's vital manufacturing industry, including increased energy costs following the conflict in Ukraine.
Moreover, weak foreign demand, elevated borrowing costs, and uncertainty surrounding economic policy have continued to weigh on the sector's performance.
Recent data have shown a mixed picture. While factory orders posted a slight increase on Friday, it was largely attributed to fluctuations in large orders. Concurrently, business surveys conducted by S&P Global indicate a deterioration in industry momentum during March.
Nevertheless, business confidence, as measured by the Ifo institute and ZEW investor expectations, improved in the previous month. This improvement was driven by expectations of potential interest rate cuts by the European Central Bank slated to begin in June, as well as a broader improvement in global economic conditions.
Economists polled by Bloomberg anticipate a marginal contraction of 0.1% in the German economy for the first quarter, following a 0.3% decline in the final quarter of last year. However, a new model developed by Bloomberg Economics suggests a more optimistic scenario, placing the likelihood of a recession slightly above 30%.
Paraphrasing text from "Bloomberg" all rights reserved by the original author.