Construction leads rise in German industrial production

German industrial production rose 2.5% in March led by a sharp rise in construction activity.

The result for March slightly beat analysts' consensus forecast for a 2.2% rise. Core manufacturing rose 0.7% and construction increased 10.8%.

Production of intermediate goods rose 1.2% and consumer goods increased 2.9%, both improvements on February. Output of capital goods dropped 0.4%, extending a 3.6% decline in February.

Compared with February 2020, the month before Covid-19 restrictions were imposed in Germany, production in March was 4.3% lower.

Germany's factories have remained busy during the 2021 lockdown, helping offset a big drop in services activity but Claus Vistesen, chief eurozone at Pantheon Macroeconomics, said core manufacturing was "underwhelming" in April.

"The good news is that this leaves plenty of room for a further upturn in Q2, as a lagged response to the upturn in new orders, and via the inevitable mean reversion in construction," Vistesen said. "The bad news is that we are now increasingly convinced that those supply-side constraints everyone is talking about are becoming visible in the official numbers."