Germany’s industrial production likely recovered in January

Germany's industrial output is expected to have rebounded in January 2016 after recording weak growth in December. However, industrial sector's growth continues to be weak. Industrial production in December had dropped 1.2% m/m, partially reflecting a decline in volatile energy component. Moreover, concerns for China might have weakened capital goods production slightly, declining 2.6%.

While energy prices dropped again in January, it will be unusual for production to decline so sharply for two consecutive months. Also, total production might have increased again with concerns regarding slight easing of global economy. Admittedly, the manufacturing PMI appears to be in line with annual production growth rising back into positive territory at the beginning of 2016.

"On balance, we have pencilled in a healthy 0.8% monthly rise in production. But this will still leave that annual growth rate at about -1% and note that February's fall in the manufacturing PMI offers no hope of renewed growth to come", says Capital Economics.