German industry output edges up on strong building sector

BERLIN (Reuters) - German industrial output rose slightly more than expected in September, helped by strong growth in construction, data showed on Wednesday, suggesting that a weaker third quarter in Europe's largest economy may be temporary.

Fears about a trade war with the United States and the risk of a disorderly Brexit are weighing on growth expectations, and leaked government documents have shown economic advisors slashing their forecasts for this year.

Economy Ministry data showed industrial output was up 0.2 percent in September, just beating a Reuters forecast for a meager 0.1 percent rise, the second consecutive monthly increase after the August figure was revised up to 0.1 percent.

Previously, it had reported a 0.3 percent decrease.

"The increase in production in September is pleasing but we're not in the clear .. industrial production has contracted significantly in the third quarter," said Sophia Krietenbrink of Germany's DIHK Chambers of Industry and Commerce.

Striking a more upbeat tone, the Economy Ministry said a weak phase in the industrial sector in the third quarter was temporary and mostly linked to slower production in the auto sector due to adjustments for a new pollution standard.

"A revival in industrial production is expected by the end of the year," said the ministry in a statement.

Output in the construction sector rose by 2.2 percent in September while it fell by 1.0 percent in the intermediate goods branch and by 3.3 percent in the energy sector.

The output data followed an unexpected rise in order data in September, driven by big ticket items and higher domestic and euro zone demand.

Several economic institutes said last week the German economy probably shrank in the third quarter after posting 0.4 percent growth in the first quarter and 0.5 percent growth in the second.

The NBR group of local newspapers reported on Tuesday that the German government's economic advisors, who present their report later on Wednesday, had cut this year's growth forecast to 1.6 percent from a previous estimate of 2.3 percent.

For next year, they now see 1.5 percent growth, down from their earlier forecast of 1.8 percent.

(Reporting by Tassilo Hummel, Maria Sheahan, Rene Wagner; Writing by Madeline Chambers; Editing by Riham Alkousaa and Maria Sheahan)

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