BERLIN, Jan 9 — German industrial output rose more than expected in November, registering its biggest monthly increase in a year and a half, though declining exports made for mixed signals on Europe’s largest economy.

Industrial production jumped by 1.1 per cent from October, beating expectations for a 0.7 per cent gain, figures from the statistics office showed today, thanks to manufacturing growth and booming construction.

The October reading was revised upwards to a one per cent decline from a previously reported 1.7 per cent decrease.

"That’s two pieces of good news for the price of one,” said LBBW analyst Jens-Oliver Niklasch, adding that the data should help to dispel any remaining fears of a recession, though the outlook for industrial companies remains clouded.

Germany’s export-dependent manufacturers are contending with sluggish demand from abroad as well as business uncertainty linked to trade disputes and Britain’s decision to leave the European Union. The automobile sector is also struggling to adjust to stricter emissions regulation and a shift to electric vehicles.

Trade figures also published today underlined the difficult outlook, with data from the statistics office showing November’s exports were down 2.3 per cent month on month while imports edged down 0.5 per cent, narrowing the trade surplus to €18.3 billion (RM83 billion).

Headwinds

The DIHK Chambers of Industry and Commerce, which expects exports to shrink this year for the first time since the world financial crisis more than a decade ago, pointed to persistent headwinds from abroad.

"Global uncertainties will remain in 2020 due to trade conflicts, sanctions or Brexit,” said DIHK economist Volker Treier.

The recent military escalation between the United States and Iran poses an additional risk.

"The escalation in the region means another factor of uncertainty for companies,” said Holger Bingmann, head of the BGA trade association.

Data released yesterday showed that industrial orders fell unexpectedly in November on weak foreign demand and a lack of big contracts, suggesting that the manufacturing slump will continue to curtail growth.

"All in all, consumption and construction should have kept the entire economy out of recession territory once again in the fourth quarter, but the former growth engine, manufacturing, is still stuttering,” said ING analyst Carsten Brzeski.

The Ifo Institute economic research body last month said that domestic demand was likely to have helped the economy to grow by 0.2 per cent in the fourth quarter after a 0.1 per cent expansion in the previous three months.

The statistics office is scheduled to release preliminary data on 2019 gross domestic product on January 15.

The German economy is widely expected to have expanded by 0.5 per cent last year, down from 1.5 per cent in 2018.

For 2020, the government forecasts one per cent growth, helped by a higher number of working days. On a calendar-adjusted basis, Berlin predicts 0.6 per cent growth this year. — Reuters