Data Not a Signal of Recovery Interruption -- Bundesbank

        By Todd Buell
        FRANKFURT--The German economy remains in very good shape, but isn't moving at the same pace that growth at the end of last year would suggest, the country's central bank said in a report Monday.
        The Deutsche Bundesbank said that while two consecutive months of weak industrial data were "disappointing", they didn't signal an "interruption of the recovery process." Still, it said "the cyclical base speed is estimated lower than the quarterly growth in the fourth quarter would suggest when seen in isolation."
        The comments suggest that even though the country continues to be a bright spot in the long-struggling eurozone, the robust growth pace of 0.7% on the quarter in the fourth quarter isn't the norm.
        The Bundesbank said the main reasons for its tempered optimism were moderate sentiment in industry and new orders data for the first two months of the year. Incoming orders in manufacturing fell in monthly terms for both January and February, data showed.
        The central bank suggested that growth in the first quarter was "quite strong," mainly on the back of consumers. "The strong growth of retail sales suggests this," said the bank.
        "The extraordinarily good consumer climate, which is based on the pleasing condition of the labor market and strong real wage rises, promises that this development will stay a while longer."
        The comments come as top European and international officials are sounding increasingly optimistic about economic developments in Europe, despite continued uncertainty about Greece's future in the currency bloc.
        "Europe has the potential to be a growth engine," said European Central Bank Governing Council member Ewald Nowotny in an interview with The Wall Street Journal.
        "The economic situation and the short-term outlook for the euro area are currently brighter than they have been for several years," ECB President Mario Draghi said Friday.
        The International Monetary Fund recently raised its forecast for the 19-country currency bloc, but it isn't quite as optimistic as the ECB.
        -Brian Blackstone in Washington contributed to this article.
        Write to Todd Buell at Todd.Buell@wsj.com
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        (END) Dow Jones Newswires

        April 20, 2015 06:20 ET (10:20 GMT)

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