German output falls in March, outlook darkens

BERLIN (Reuters) - German industrial output rose strongly in the January-March period but lost momentum late in the quarter and will likely lose more steam in the months ahead, the Economy Ministry said on Thursday.

In seasonally adjusted terms, output fell by 0.5 percent on the month in March, in line with the expectations of economists polled by Reuters. Output rose 2.3 percent in the first quarter.

February output data was revised down by 0.2 percentage points to show a monthly gain of 0.2 percent.

"In this difficult climate, the German economy is holding up well. Despite the decline, industrial production is robust," said Barclays Capital economist Thorsten Polleit. "But there will be a slowdown."

"Companies are pretty well positioned," he added. "Their competitiveness in terms of pricing is excellent despite the strong euro. They should win further global market share."

Some German companies say the euro's strength -- the currency has risen by around 10 percent in a year -- is affecting their business.

However, automotive parts supplier Robert Bosch GmbH said it expected to shrug off the firmer euro and generate revenue growth of around 5 percent in 2008.

"The operating environment may have weakened, but we do not foresee a global downturn. In light of that, we expect the Bosch Group to continue to perform well on the whole," Chief Executive Franz Fehrenbach said in a statement.

The fall in industrial production in March was marked by a 12.3 percent decline in construction output as the sector eased after profiting from mild weather earlier in the year.