By Paul Carrel
BERLIN, Aug 7 (Reuters) - German exports surged at their fastest pace in almost three years in June, showing the economy's industrial engine room is emerging from its deepest recession since World War Two.
The 7.0 percent rise, reported by the Federal Statistics Office on Friday, far surpassed the consensus estimate for a 1.1 percent gain and helped the trade surplus rise to 11.0 billion euros from 10.2 billion euros in May.
The monthly export rise was the biggest since September 2006 and showed Europe's largest economy is stabilising after a collapse in exports saw it shrink by 3.8 percent in the first quarter -- the deepest contraction since reunification in 1990.
A dip in industrial output in June, also reported on Friday, took the shine off a run of positive economic news from Germany this week but economists said the economy was nonetheless poised to recover.
'Output should pick up again this summer. And that should mean there's a good chance we'll see growth in the third quarter,' said Holger Sandte, economist at WestLB.
'The orders are there. It's just that they've not been worked off as fast as we thought,' he said.
Data released on Thursday showed manufacturing orders rose at their fastest pace in two years in June on strong foreign demand and Economy Minister Karl-Theodor Guttenberg said the economy held steady in the second quarter.
The rise in orders, which followed a strong gain in May, was marked by an increase in foreign demand for capital goods, which German firms have a reputation for producing to a high quality.
'Given the significant rise we've seen in orders, the economic low point for industry has likely passed,' the Economy Ministry said in a statement on the industrial production data.
German engineering companies Gildemeister and Demag Cranes said on Tuesday they expected to be profitable this year.
DOMESTIC RISK
A breakdown of the latest output data showed energy production rose by 0.4 percent on the month, while construction output fell by 1.4 percent. Manufacturing output was unchanged.
'At least there are some signs of respite in the industrial sector and given signs of an improvement in global demand, we see the German economy expanding modestly in 2010,' said Jennifer McKeown at Capital Economics.
The domestic economy risks holding back a recovery, however.
German retail sales fell by 1.8 percent month-on-month in June, missing expectations for a slight rise and denting hopes that consumer spending could help support the economy.
Germany's Metro, the world's fourth-largest retailer, said on Monday it expected sales to fall further in the coming months, mainly due to rising unemployment.
Major use of shortened working hours has reduced job losses in Germany, where unemployment has risen by only 300,000 since the global financial and economic crisis intensified with the collapse of U.S. investment bank Lehman Brothers last September.
Economists expect headline unemployment to rise towards 4 million by the end of this year from 3.462 million in July, and for consumers to rein in their spending as a result.
Ulrike Kastens, economist at Sal. Oppenheim, said any rebound in Germany would likely be slow as the global economy on which its export-focused economy is heavily reliant is recovering only slowly.
'The intensity of the recession is fading, the worst is behind us in the first quarter. But things remain very bumpy and uncertain,' Kastens said.
(Additional reporting by Dave Graham and Caroline Copley, editing by Mike Peacock) Keywords: GERMANY ECONOMY/ (paul.carrel@reuters.com; +49 30 2888 5214; Reuters Messaging: rm://paul.carrel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BERLIN, Aug 7 (Reuters) - German exports surged at their fastest pace in almost three years in June, showing the economy's industrial engine room is emerging from its deepest recession since World War Two.
The 7.0 percent rise, reported by the Federal Statistics Office on Friday, far surpassed the consensus estimate for a 1.1 percent gain and helped the trade surplus rise to 11.0 billion euros from 10.2 billion euros in May.
The monthly export rise was the biggest since September 2006 and showed Europe's largest economy is stabilising after a collapse in exports saw it shrink by 3.8 percent in the first quarter -- the deepest contraction since reunification in 1990.
A dip in industrial output in June, also reported on Friday, took the shine off a run of positive economic news from Germany this week but economists said the economy was nonetheless poised to recover.
'Output should pick up again this summer. And that should mean there's a good chance we'll see growth in the third quarter,' said Holger Sandte, economist at WestLB.
'The orders are there. It's just that they've not been worked off as fast as we thought,' he said.
Data released on Thursday showed manufacturing orders rose at their fastest pace in two years in June on strong foreign demand and Economy Minister Karl-Theodor Guttenberg said the economy held steady in the second quarter.
The rise in orders, which followed a strong gain in May, was marked by an increase in foreign demand for capital goods, which German firms have a reputation for producing to a high quality.
'Given the significant rise we've seen in orders, the economic low point for industry has likely passed,' the Economy Ministry said in a statement on the industrial production data.
German engineering companies Gildemeister and Demag Cranes said on Tuesday they expected to be profitable this year.
DOMESTIC RISK
A breakdown of the latest output data showed energy production rose by 0.4 percent on the month, while construction output fell by 1.4 percent. Manufacturing output was unchanged.
'At least there are some signs of respite in the industrial sector and given signs of an improvement in global demand, we see the German economy expanding modestly in 2010,' said Jennifer McKeown at Capital Economics.
The domestic economy risks holding back a recovery, however.
German retail sales fell by 1.8 percent month-on-month in June, missing expectations for a slight rise and denting hopes that consumer spending could help support the economy.
Germany's Metro, the world's fourth-largest retailer, said on Monday it expected sales to fall further in the coming months, mainly due to rising unemployment.
Major use of shortened working hours has reduced job losses in Germany, where unemployment has risen by only 300,000 since the global financial and economic crisis intensified with the collapse of U.S. investment bank Lehman Brothers last September.
Economists expect headline unemployment to rise towards 4 million by the end of this year from 3.462 million in July, and for consumers to rein in their spending as a result.
Ulrike Kastens, economist at Sal. Oppenheim, said any rebound in Germany would likely be slow as the global economy on which its export-focused economy is heavily reliant is recovering only slowly.
'The intensity of the recession is fading, the worst is behind us in the first quarter. But things remain very bumpy and uncertain,' Kastens said.
(Additional reporting by Dave Graham and Caroline Copley, editing by Mike Peacock) Keywords: GERMANY ECONOMY/ (paul.carrel@reuters.com; +49 30 2888 5214; Reuters Messaging: rm://paul.carrel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.