German economy to end 2017 "with a bang" as industrial output surges

By Joseph Nasr and Michael Nienaber

BERLIN (Reuters) - Germany's industrial production and its exports rose more than expected in November, pointing to continued rising growth in Europe's largest economy in 2018.

Industrial output jumped by 3.4 percent on the month, the strongest increase since September 2009, data from the Federal Statistics Office showed on Tuesday, overshooting a 1.8 percent forecast in a Reuters poll.

November seasonally adjusted exports rose by 4.1 percent on the month and domestic demand pushed up imports by 2.3 percent. Both figures beat Reuters forecasts and widened the trade surplus to 22.3 billion euros ($26.61 billion) from 19.9 billion euros in October.

"November's surge in German industrial production is a welcome confirmation that the economy approached the end of 2017 in very good health and the surveys point to further strength to come," Jennifer McKeown of Capital Economics wrote in a note.

The figures and buoyant business sentiments suggest "that the German economy ended 2017 with a bang after the third-quarter's impressive 0.8 percent expansion," she added.

The economy has continued to surge despite political deadlock as Chancellor Angela Merkel has failed to form a new coalition government since a September election.

The rise in output confirmed assumptions by economists that a fall of 1.2 percent in October was the result of limited factors, namely two public holidays.

A breakdown of the output data showed the main drivers were capital and consumer goods spending as well as construction.

The Statistics Office will on Thursday publish full-year gross domestic product figures for 2017 which is forecast at 2.4 percent growth.

"German GDP looks set to have risen by slightly more than our above-consensus forecast of 2.5 percent in 2017 and we expect a similarly strong pace of growth this year," said McKeown.

($1 = 0.8379 euros)

(Additional reporting by Rene Wagner; Writing by Joseph Nasr; Editing by Robin Pomeroy)