(RTTNews) - German industrial production continued its recovery in September as orders continued to grow, while exports rebounded after a fall in August despite a strong euro.

Industrial production rose a seasonally and calendar adjusted 2.7% month-on-month in September after a revised increase of 1.8% in August, the Federal Ministry of Economics and Technology said Monday. Economist had forecast a 1% increase. On a year-over-year basis, industrial output fell 12.9%.

“This shows that Germany’s economy is currently staging a strong recovery after its collapse in the previous winter half,” Commerzbank analyst Ralph Solveen said.

On November 6, the ministry said German factory orders rose for a seventh month in September due to an increase in foreign orders, giving strong indication that the manufacturing sector has passed the worse.

“Despite worse-than-expected private consumption over recent months, the pick-up in industrial activity and the turning inventory cycle promise the strongest quarter in terms of GDP growth since Q1 2008,” ING economist Carsten Brzeski said. But the economist warned that the current pace of the recovery will not last forever as a worsening labor market and increasing uncertainties about the government’s planned tax cuts could become a risk factor next year.

Also on Monday, the Federal Statistical Office reported that Germany’s exports rose 3.8% month-on-month in September to EUR 70 billion. At the same time, imports rose 5.8% to EUR 59.4 billion in September. In August, exports had declined 2.8%, while imports recorded 0.5% monthly growth.

The trade surplus increased to EUR 10.6 billion in September from EUR 8.1 billion in August. However, the surplus came in below the EUR 11.2 billion-surplus expected by economists. A year ago, the surplus totaled EUR 15.3 billion. According to provisional results of the Deutsche Bundesbank, the current account of the balance of payments showed a surplus of EUR 9.4 billion in September compared to EUR 4.4 billion in August.

“Strong growth in trade shows that the global economy is gaining momentum again,” Commerzbank analyst Simon Junker said. “The demand for German products has picked up significantly and this points to substantial growth rates in the coming months too.”

The German economy exited recession in the second quarter by expanding 0.3% sequentially, ending a series of contractions that started in the second quarter of 2008. The European Commission said in its Autumn forecast that the biggest Eurozone economy is likely to contract 5% this year and is expected to expand by 1.2% next year and by 1.7% in 2011.

The outlook for German industry for next year is “guardedly positive” amid improved sentiment and a strong pick up in production in some important upstream sectors, Deutsche Bank Research said in a recent report. On November 3, Germany’s chemical industry association VCI said the pace of recovery in the industry is gaining speed boosted by demand from Asia and Latin America. Survey data from Markit Economics showed recently that Germany’s manufacturing sector increased for the first time since July 2008.

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