German industrial production rose surprisingly in September, official figures published on Monday showed, despite concerns the economy was slipping towards recession amid soaring energy costs.

Output increased 0.6 per cent in September on the previous month, according to preliminary data from federal statistics agency Destatis.

Revised figures showed that output figures fell by 1.2 per cent in August on a month, more than previously reported. 

Despite the rise in September, analysts and officials remain pessimistic about the outlook for the German economy, as Europe's powerhouse is squeezed by elevated energy costs.

"The mood among companies is still very low and demand is noticeably decreasing," the economy ministry said in a statement.

In energy-intensive industries, such as chemicals or metals, production fell in September by 0.9 per cent, according to Destatis.

An "extreme shortage of intermediate products", resulting from the coronavirus pandemic and the war in Ukraine, also continued to drag on production.

Despite the strong headwinds, German GDP grew in the third quarter from July to September by 0.3 per cent.

"Industry didn’t fall off a cliff in the third quarter but stagnated," said Carsten Brzeski, head of macro at the ING bank.

Industry didn’t fall off a cliff in the third quarter but stagnated- Carsten Brzeski, head of macro at the ING bank

Recent economic data still suggested a coming recession, Brzeski said, pointing to a steep four per cent drop in industrial orders in September.

"The state of the economy is clearly worse than the third-quarter GDP data suggested," Brzeski said.

Berlin has signed off on a €200-billion package to mitigate the impact of painful price rises for household consumers and businesses.

The measures include an energy price cap to come into force next year, which will see the cost for a percentage of typical usage limited to lower-than-market prices. 

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