Germany is undergoing an economic boom amid the broadest euro-zone expansion in almost two decades and strengthening global demand. With record-low unemployment, the country could be a bellwether for the European Central Bank this year as policy makers try to judge when inflationary pressures will warrant unwinding their crisis-era measures for the 19-nation currency bloc.

November’s gain in output was almost twice as much as forecast in a Bloomberg survey and compared with a revised 1.2 percent drop in October. Demand for investment goods jumped 5.7 percent and output of consumer goods climbed 3.6 percent. Construction increased 1.5 percent.

The nation will report full-year economic growth on Thursday, with economists predicting a rate of 2.4 percent that would be the fastest since 2011. Survey data showed private-sector manufacturing last month was at the highest level in more than two decades.

The euro area has a similar tale to tell, with manufacturing and services expanding at the fastest pace in almost seven years, and a report on Monday showing economic confidence at an almost two-decade high.

Read more: Euro-Area Economic Confidence Soars to Nearly Two-Decade High

At the same time, the region’s inflation remains muted and well below the ECB’s goal of just under 2 percent, in part because wage growth is slow. That puts Germany in the spotlight as the IG Metall union meets employers this week to push for a 6 percent pay increase and greater flexibility in working hours for 3.9 million metalworkers and engineers.

— With assistance by Alexander Kell, Lukas Strobl, Kevin Costelloe, Andre Tartar, and Kristian Siedenburg

 

Source: AFP