German industrial production started the year on a stronger footing. In January, industrial production rebounded by 1.6% M/M in Germany after an upwardly revised 2.6% M/M decline in December. The consensus was looking for a more moderate 1.1% M/M increase. The details show that strength was broad-based as production picked up in energy (1.7% M/M), construction (4.3% M/M) and in manufacturing & mining (1.4% M/M). Within the manufacturing sector, the rebound was led by capital goods (3.5% M/M) and durable consumer goods (2.3% M/M). Production of intermediate goods (-0.2% M/M) and non-durable consumer goods (-0.4% M/M) weakened slightly in January. This outcome poses an encouraging start to the new year after the German economy contracted slightly at the end of 2011. Nevertheless, factory orders earlier this week suggested that the outlook for the German economy remains challenging and the country is not yet out of the woods.