German factory output impresses

The German manufacturing sector seems to be improving

German industrial output rose by a surprise 3.7% in May compared with April, the latest sign that the country's recession may be easing.

The rise was much larger than the 0.5% analysts had predicted, yet May's output was still down 19% from a year earlier, the economy ministry said.

The official data came a day after figures showed rising factory orders.

Germany is suffering its worst recession since World War II, with the economy expected to shrink 6% in 2009.

The number of people unemployed in the country rose to 3.495 million in June, an increase of 31,000 from May, recent data showed.

'Relief'

"Today's industrial production numbers offer some relief for German industry," said Carsten Brzeski, an economist at ING Financial Markets.

"The recession in the industrial sector is bottoming out."

There had already been signs that German firms were experiencing a turnaround in fortunes.

A survey last month by the IFO Institute said confidence in companies across all sectors of the economy had risen to a seven-month high in June.