Industrial production in Germany is growing at the highest rate in 20 months.

Data released on Tuesday by the German Federal Statistical Office (Destatis) indicated that the country's industrial production grew in August far exceeding market expectations, reflecting an improvement in industrial activity in Germany and its impact on the economic growth of the largest economy in the Eurozone.

According to the reported data, Germany experienced a monthly increase in industrial production of 2.9% in August, the highest rate since January 2023, while market expectations projected only a 0.8% growth, following a contraction of 2.4% in July, which was revised to a decline of 2.9%.

However, on a yearly basis, official data indicated a contraction of 2.7% in industrial production in Germany in August, which is better than the previous reading for July that showed a contraction of 5.3%.

It is worth noting that industrial production measures the output of factories and mines within Germany, and the change in the volume of industrial production is a key indicator of the strength of the manufacturing sector in the country. A positive reading of the index is viewed as a bullish sign for the euro, while a low reading is seen as a bearish indicator for the euro in Germany.